Energy companies have been forced to stop fitting prepay meters against customers' wishes until the industry watchdog is satisfied a new code of practice is being followed.
The ban - which includes switching smart meters into prepay mode remotely as well as new meter installations ordered by court warrants - follows outrage at reports that vulnerable households were forced to accept prepay meters they did not want after running up debt.
Last month, following reports in The Times newspaper, regulator Ofgem wrote to energy firms to put a temporary ban in place until the end of March. But Ofgem has now said the ban will continue indefinitely and won't be lifted until energy firms prove they are acting in accordance with a new code of practice.
Read more: Your rights if you have had a prepay meter fitted against your will
The intervention follows an undercover The Times investigation, which revealed how some debt collectors working on behalf of British Gas were allegedly breaking into people's homes to install prepayment meters while ignoring signs of extreme vulnerabilities. The report has triggered a 'market review' by Ofgem into how prepay meters are handled across the industry, Ofgem boss Jonathan Brearley said that energy firms should start removing prepayment meters and compensating families whose homes were wrongly fitted with one and the regulator has told energy suppliers they should act now, rather than wait for the new guidance to be published, according to reports.
Suppliers have argued that installing prepayment meters allows them to recover debts and stops consumers amassing larger amounts of debt. Energy UK, the trade association for suppliers, has regularly highlighted that suppliers can be left with debts from customers who do not pay their bills. These mounting debts would have to be recovered from everyone else's bills if there was no option of moving people onto prepayment meters for debt recovery.
"Suppliers have already paused prepayment installations by warrant in order to carry out reviews of their own practices and they will look to put things right if they find cases where prepayment meters have been installed inappropriately," Energy UK told the BBC. "The industry has already been talking to Ofgem and the Government about how best we can support the most vulnerable customers going forward, including the role a social tariff could potentially play, which needs to be part of the discussion around the use of prepayment meters."
Citizens Advice Newcastle joined the call for new protections to stop people being fully cut off from energy if they could not afford to top up and called for a total ban on energy companies forcing those already at breaking point onto prepayment meters. The charity has previously warned of its fears that people could die in their cold homes amid figures from the CAB that 3.2 million people in the UK had been left without energy at some point last year after struggling to top up their meter in the cost of living crisis. An estimated 600,000 people were forced to make the switch away from credit meters after racking up debt with their energy supplier in 2022.
There are more than four million UK households on prepayment meters, which supply energy only when customers top up their meter with credit. MoneySavingExpert.com founder Martin Lewis has previously said moving customers onto prepay meters meant many would essentially self-disconnect from gas and electricity, adding that energy firms shouldn't be let off the hook if they blame third-party contractors for any failings.
Benefits campaigners Benefits and Work is calling on people who have been forced to have a prepay - or Pay As You Go (PAYG) meter - fitted to contact the website.
"Energy suppliers have been told by Ofgem to pay compensation to customers wrongly forced to have prepayment meters. Other customers may have the right to have their prepayment meters removed, even if they don’t get compensation. We would like to hear from Benefits and Work readers if you have been affected by this growing scandal," the website says.
"According to Ofgem rules, suppliers can’t legally force-fit a prepayment meter under warrant for people in very vulnerable situations if they don’t want one. Nor can they legally use warrants on people who would find the experience very traumatic. Yet it has become increasingly clear that suppliers have been forcibly fitting meters unlawfully with virtually no scrutiny by courts, who simply took the suppliers' word that all the necessary checks had been made."
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