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Why does OVO use Direct Debits rather than standing orders?

  • 4 April 2022
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Seems to me OVO do not understand the concept of a Standing Order and a DD.

Ovo let me educate you.

 

DD = variable amounts, can be taken at any time although normally scheduled

Standing Order = fixed amount , taken on a scheduled date

 

So when you ask your customers to set up a DD then state we are changing the amount you pay every month , you are showing your ignorance of the banking system.

hence I cancelled my DD and will pay weekly as I do now. Should you amend your understanding of the banking system, I will consider resetting up my DD or Standing order, or would you like me to explain the concept again?

 

who else thinks OVO don’t know the difference?

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Best answer by M.isterW 4 April 2022, 18:19

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nealmurphy
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In some versions of the Terms and Conditions there is a clause along the lines of: “If there are any changes to the amount, date or frequency of your Direct Debit we’ll notify you in advance of your account being debited.”

Therefore they are complying with the T&Cs and being jolly nice by keeping you in the loop. I think it’s more important to be nice than having an in depth knowledge of the banking system.

M.isterW
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So you set up a DD and OVO have told you they're changing the amount they take each month?

 

That's exactly how a DD works. What's your complaint?

1992 4 bed detached house. Solar PV + battery, Zappi EV charger, Mitsubishi Ecodan ASHP and i-life2 fan assisted radiators.... No gas 😊
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The wording is written as every month we will take such and such out of your account as we have worked out your annual bill is such and such. So they could take this amount every month even if you only owe £20. I pay weekly so their wording suggests they will take a larger amount regardless of if I’m in credit or debit.

 

fyi 17 years in banking, I know the difference. DD’s are variable not a fixed amount. That’s how DD’s work!!!!

M.isterW
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Updated on 06/10/23 by Emmanuelle_OVO

 

How do you calculate my Direct Debit when I first join?

When you apply to switch to us, we’ll use your annual usage figures, as well as the unit rates and standing charges on your new plan to calculate how much your energy will cost over the year. We’ll divide this into 12  if you’re in a fixed rate contract- which gives us the recommended monthly Direct Debit amount. You should be able to find out this annual usage figure from your current supplier. If you don’t know this figure, we can also base this calculation on average usage in your size of home. 

 

You can find out more on how we calculate your Direct Debit below:

 

 

What they're doing is in line with what energy companies have been doing for decades. Your energy use isn't constant throughout the year so to avoid you paying large amounts in the winter they charge you an average monthly amount to spread the cost evenly throughout the year. I'm astonished that you've only just noticed that they do this because I've been paying for my energy in this way for many, many years.

 

They use direct debits, rather than standing orders, because it allows them to manage the collection better and also change the amount without having to set up a new standing order. It is absolutely correct to use a direct debit in this way and I'm amazed that you don't know this if you claim to have worked in banking.

 

1992 4 bed detached house. Solar PV + battery, Zappi EV charger, Mitsubishi Ecodan ASHP and i-life2 fan assisted radiators.... No gas 😊
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After I switched from paying by direct debit to standing order, OVO sent me an email saying I’d defaulted on my account, although payments were being made as usual. As the default notice comes with a threat of legal action, I asked by email for a written explanation of why my account had been placed in default, but haven’t received a reply. I get plenty of phone calls from clueless call centre people who don’t have an answer anyway, but obviously if there’s legal action I’ll need a written audit trail. Any advice on how to get something in writing out of OVO? 

Firedog
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If you use webchat to contact Support, you’ll have everything in writing. 

Meanwhile, I suggest you have a look at this: OVO Energy Payments and Ways to Pay | Customer Help and Advice; you’ll see that standing orders aren’t mentioned. I’m not certain of the reason, but it’s probably that it’s difficult to match payments by SO to accounts, and your experience would fit with this explanation. You didn’t say why you chose to stop paying by Direct Debit; it’s the simplest way, it works just like a standing order - an automatic payment of the same amount each month - and it’s quite a bit cheaper. 

 

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Blastoise186
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It is also worth noting that by cancelling the DD, you are AUTOMATICALLY booted over to Pay On-Demand which requires that you pay the entire outstanding balance on time every month without fail. In other words, you lose the bill smoothing and have to cough up enough cash to bring the account balance to £0 credit or above (£1 or higher credit is recommended) every single month before the due date stated on every bill.

You only get the effects of bill smoothing on a Direct Debit - no other payment method with ANY energy supplier allows this.

Simply setting a Standing Order for what the DD amount was will not suffice - payments must clear the entire balance by the due date or you go bust, hence the name Pay On-Demand.

It sounds to me like you’ve either failed to pay enough in (possibly multiple times) or you had a negative balance at the point of being booted over and failed to clear it. Unfortunately, that’s the risk you take when you attempt to use unsupported payment methods and it has burned many people - which is why we constantly advise against using a SO to pay energy bills.

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thanks for all the advice. I only moved from Direct Debit to Standing Order on the advice of my bank as I am a pensioner on a small fixed income and the regular hikes in DD by OVO were playing havoc with my budgeting and forward financial planning. Thank you Blastoise186 for explaining so clearly the implications of switching from DD to SO, but the mystery remains, why did OVO refuse to tell me this themselves when I repeatedly asked why I had been placed in default??? I’ve reverted to DD now by the way - I know when I’m beaten.  

Blastoise186
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That’s the problem with banks I’m afraid - they often don’t think about the consequences of doing stuff that they haven’t fully researched themselves first. I’d recommend you possibly complain to them about that bad advice, but I’ll leave that up to you.

I don’t have access to your account, so I’m afraid I can’t see exactly what is (or has been) happening. I’ll raise this on the Forum backstage - please bear with me.

Securing energy by zapping security bugs... For that is The Blastoise Way!

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