Stopped Direct Debits Trigger Debt Collection Woes at Shell Energy

A few of Shell Energy’s UK broadband ISP customers, seemingly including some of those who were previously with First Utility before the recent rebrand, complain that they have been hit with letters from Debt Collectors after the provider appeared to stop taking automatic payments via established Direct Debits.

Just to recap. First Utility, which supplied over 700,000 UK households before the change, agreed to sell its business  (valued c.£200m-£300m) to Anglo-Dutch oil company Shell Petroleum Company Ltd. in 2017 (here). The sale was recently followed by a move to re-brand First Utility to Shell Energy in March 2019 and the latest problem began shortly after that.

Since then a small number of Shell Energy customers have informed us (as well as posting sporadically on other sites / social media) that the company appeared, without any warning, to stop taking payments via their existing Direct Debit (i.e. the DD is still active, it just wasn’t being used by Shell).

The first that those affected knew of this was when Shell Energy’s debt collection firm of choice – Corporate Debt Solutions Global – sent them a letter that threatened disconnection of the service due to non-payment, which as you can imagine will have come as quite a shock.

The issue doesn’t appear to be widespread (we’ve only seen a handful of reports), although upon contacting the Debt Collection firm one of those affected was told by the company that they had experienced an “influx of Shell customers being passed on to them [due] to the Direct Debits being stopped by the banks.”

Bianna, Shell Energy User, told ISPreview.co.uk:

“Because of the rebrand, their Direct Debits stopped working, and I’m being told that many customers, me included, have accumulated arrears and been passed to debt collection and are being threatened with disconnection due to non-payment – except the Direct Debit is still in place, Shell Energy just didn’t collect any payments for the last 2-3 months.”

Bianna added that she and her husband, after complaining about their treatment, then paid off the outstanding balance but were soon sent another letter, which this time said that their broadband and phone service would be disconnected. Shell apologised to the couple and told ISPreview.co.uk that this is because the letter her husband received was issued prior to Shell Energy receiving payment on the outstanding balance.

The energy and broadband provider has spent the past couple of weeks investigating why these and other direct debit payments failed. Shell Energy has now confirmed that a total of just 26 broadband customers were found to have been affected by the same problem.

A Shell Energy spokesperson told ISPreview.co.uk:

“It appears that this issue may have been the result of customers updating their direct debit details within the three day cycle it takes for Bacs Direct Debits to clear, leading their payments to fail. We apologise that Shell Energy did not spot this problem had occurred sooner and for any inconvenience or distress caused.

We have now fixed the problem on these customers’ accounts and will be contacting them directly to update. We have also put in place wider control checks to prevent similar issues from happening in the future.”

Sometimes Direct Debits do fail, although generally consumers will expect to be notified of missed payments by their provider at the first instance and it’s highly unusual for that process to instead skip to a Debt Collection agency as appears to have happened above (these are usually only deployed as a matter of last resort).

The use of a Debt Collector may in some circumstances also result in a negative mark being put on the customer’s credit file and hopefully this is something that the company will check, particularly now that the problem has been identified and corrected.

In fairness there’s also something to be said, particularly in this age of banking fraud and scams, for keeping a close eye on the bank account that you use for making such payments. Good management of a personal bank account can help to spot problems before they become too serious.