Households landed with higher energy bills after using money-saving scheme

A smart energy meter, used to monitor gas and electricity use, is pictured with a ceramic hob in a home in London

Thousands of households may have been unwittingly forced on to more expensive energy tariffs by so-called “auto-switching” services, it has emerged.

As many as 20,000 households have been moved to a different supplier without their knowledge, with some unable to revert to their original provider, a report submitted to Ofgem claims.

The regulator is now under pressure to crack down on auto-switching firms, which have been accused of taking advantage of falling energy costs and “ripping customers off” with fees of up to £90 in commission. Ofgem has said it is “carefully considering” the report’s findings.

Auto-switching platforms soared in popularity before the 2021 energy crisis. They work by automatically moving customers to the cheapest available tariff.

Customers either pay a monthly fee for the service, or the platform bakes in a commission by charging customers a higher rate for their power use than they would pay if they had signed up with a supplier directly.

Many auto-switching platforms suspended their services after wholesale costs surged above the energy price cap.

But thousands of customers have remained signed up to these services without their knowledge, a report by Octopus Energy claims.

Alexander Stafford, MP for Rother Valley and member of the Energy Security and Net Zero Committee called for the auto-switching market to be regulated.

He said: “Just as energy prices look to be returning to pre-Ukraine war levels, I am disgusted to find auto-switching firms are taking this opportunity to gouge money from hard-working customers.

“Ofgem must do more to protect families from this kind of exploitation, there is a clear need for the regulator to move quickly and use the powers given to it by Parliament to stop these profiteers now.”

The supplier said it has received thousands of complaints from customers who only discovered they had switched suppliers after a bill landed demanding a payment.

Octopus said that typically only one in 20 customers switching providers later change their mind, but it first raised concerns after around 50pc of its customers cancelled switches made in March.

The supplier said that the majority of customers had no recollection of having registered with an auto-switching service, and did not know why they were being switched.

Many of these customers had signed up for the platform years ago but had not heard from the company in several years. The report noted that “often their view is that consent had expired”.

Others were tenants of properties where the meter had been registered to a switching firm by a previous occupier.

In some cases, customers were unable to cancel the switch because the supplier was too inundated with calls to respond in time, Octopus’s report said.

Based on its own share of the energy market, Octopus estimates that overall some 20,000 households were switched without their knowledge this year.

Mr Stafford said: “These firms are clearly acting against the wishes of customers who are powerless to stop these firms from ripping them off.

“With energy debt at the highest level ever, Ofgem cannot continue to stand idly by when the weight of evidence shows they must work fast to protect households.”

‘They tried to pressure me’

Kevin Kemp, a builder from Aberdeen, recalled signing up for an auto-switching service but had assumed his details had been long since removed.

In March, Mr Kemp, 59, received an email to say he had been moved to a little-known energy company, and money would be extracted from his bank account in April.

He said: “I phoned the energy company and they tried to pressure me into submission. They just kept saying, ‘we’ve automatically changed you to a better tariff’.”

Some auto-switching firms charge a monthly fee to move customers between providers.

Others, such as Switchcraft, advertise themselves as “free” but add a levy to tariffs secured through the service. Octopus’s report claims that this can result in a bill up to £90 more expensive than if a customer manually changed providers themselves.

Recommended

The best energy suppliers of 2024 – according to customers

Read more

Andrew Long, chief executive of Switchcraft, said: “Our mission is to eliminate the loyalty penalty in the energy market and we firmly believe that healthy competition between suppliers is the best way to drive bills down for all of us.

“In my opinion, Octopus’s inaccurate attack on auto-switching may unfairly undermine competition just when wholesale energy prices are falling and we should all be in the market for a better deal.”

Others said their switching services remain paused.

MoneySavingExpert’s Cheap Energy Club turned off its Pick Me A Tariff Every Year function and paused its Cheap Energy Club alerts in October 2021.

A spokesman said: “We always required a clicked consent from the user before they were switched to avoid any issues like this. No user could be switched without them accepting it.”

Labrador, another switching service that paused activity in the crisis, said it was “waiting for suppliers to launch more competitive tariffs, which better take into account future changes to the price cap.”

A spokesman added: “Given the long period of time since we have been able to switch customers, we would not do so without communicating a very clear update to them all and asking them to check their permissions and switching preferences.”

A spokesman for Ofgem said: “We’re grateful to Octopus for bringing this issue to our attention and are carefully considering their findings.

“We expect both suppliers and third-party switching services to act in their customers’ best interests, and to make sure they are communicating with them clearly before initiating a switch.

“We have also strengthened the rules that mean when consumers do decide to change their energy supplier it is a smooth process, and they are quickly compensated if it doesn’t go to plan.

“We’ll continue to work closely with industry and consumer groups and charities to make sure these rules are working to protect consumers in the coming weeks and months.”

Play The Telegraph’s brilliant range of Puzzles – and feel brighter every day. Train your brain and boost your mood with PlusWord, the Mini Crossword, the fearsome Killer Sudoku and even the classic Cryptic Crossword.