Energy bills: Cancelling direct debits is risky says expert
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Calls for the boycott of energy bills have been growing as Britons face the prospect of having to pay thousands of pounds over the next year amid the ongoing cost of living crisis. But expert Paul Lewis has warned refusing to pay the bills is a serious “financial risk” that could have wider consequences on credit scores and plans to take out a mortgage. Speaking to LBC, Mr Lewis said: “I can understand why they are frustrated, they don’t feel as if there is any way of protesting about this.
“So not paying, cancelling their direct debit is their approach. If you do that, though, you do take big risks.
“First of all, you’ll have late payment fees added. Secondly, your credit score could be harmed. And if you’re thinking about getting a mortgage or re-mortgaging in the future, that could be very damaging for you.
“Then you could find you’re fitted with a pre-payment meter because the energy company will want to make sure in the future you do pay for your energy and that can be done remotely if you’re on a smart meter.
“And, of course, the charges on pre-payment are somewhat more expensive so there is a lot of financial risk for doing this.”
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End Fuel Poverty campaigner Simon Francis insisted the Government should increase the aid currently available to help Britons shave off £400 off their bills.
He insisted an additional £600 off bills would help people cope better but said more progressive measures are needed to avoid a repeat of the crisis year in, year out.
Mr Francis said: “The first thing we need to see is emergency financial support for all households in addition to the £400 that’s already being given by the Government and is coming off people’s bills.
“They’ve established a mechanism to do that now. I think the starting point is £1000 coming off people’s bills to try and get us down to the levels that are nearer to where we were.
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“It’s huge, it’s an absolutely huge amount of money but this is the biggest crisis that is affecting people’s finances since the banking crash and it needs a response that is commensurate with that level of crisis.
“We need support but we also need more increased targeted support for those groups that are on benefits, the elderly.
“What we also need to do is also appreciate this is a big financial crisis but it happens every winter.”
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Ofgem last week confirmed the energy price cap will be updated quarterly, rather than every six months, as it warned that customers face a “very challenging winter ahead”.
It said the change would go “some way to provide the stability needed in the energy market”, adding: “It is not in anyone’s interests for more suppliers to fail and exit the market.”
The regulator cited Russia’s actions in Ukraine as the main source of volatility in the global energy market experienced last winter lasting “much longer, with much higher prices for both gas and electricity than ever before”.
As expected, Ofgem warned that as a result of the market conditions, the price cap would have to increase later this month to reflect increased costs.
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