Unexplained change to direct debits?

Great, thank you. Just one thing: when is this (and the communication that prompted it) dated? We first became aware of the change this thread is discussing on 1 November, so it’s possible that the original message included some terms that weren’t supposed to take effect until later.

My personal view is that ### was talking out of turn when he mentioned the tax year. We learnt last year that the new reference date of 31 March (rather than one year hence for variable contracts or end of contract for fixed ones) was chosen as the end of the winter semester - a reasonable point for account balances to be at zero. The fact that this coincides with the end of the tax year is (perhaps not entirely) coincidental. OVO’s financial year is the calendar year.

Semantics I know but 31st March is not the end of the tax year .. that is 5th April

You out-pedanted me! 

I’ve been nosing around trying to find out whether Ofgem have anything to say about how DDs are calculated. This is the first passage I found:
  

In an Ofgem ‘Decision’, expect can only mean require.  I hope @MCH59 comes back to tell us how his Ofgem contact reacted to his approach.

There is a bug in the system that has made it so that customers have been receiving communications regarding direct debit reviews with the end date of 2026. This is actually supposed to say 2025, we apologise for the confusion.

That reply from ‘agent ###’ is simply incorrect to suggest that it’s only the comminication that is in error.
(I suspect that agent ### has even less idea than we do of what is going on and so has become confused and given you the position as it was with the similar DD change that happened to variable tariffs last year).

It is not a simple typo/miscommunication of the year.

Direct Debits ARE indeed currently being calculated to reach zero balance at the end of March 2026.

They are NOT being calculated to reach zero at the end of March 2025

Anyone who knows how to view their DD calculator API can verify that fact for themselves.

Here is a snip from mine taken just minutes ago:
 

My explanation of what I now think is actually going on is in the next post:

I have been thinking through just what OVO are doing (but not yet saying clearly).

My stab at a simple to understand explanation is as follows:

• A Fixed Term Contract will still fix your tariff for 1 year (or 2 years) from the commencement date.
  Nothing has changed there - it is still a price fix for one year or two years..
• However OVO will no longer calculate your DD payments for the same period that the tariff has beeen fixed for.
• Instead everybody's DD’s will be calculated to attain zero balance on 31st March each year, starting with 31st March 2026.
• Fixed Tariff or Standard Variable Tariff makes no difference, as things stand after this change all Direct Debits will now be calculated to attain zero balance on 31st March 2026 and then each 31st of March ongoing.

As I said above:

as that transition is being done it will cause issues for some.

All migrations/transitions to new systems are going to cause issues for some.

The updated help article suggests that all DD customer accounts are treated the same:

Easing the burden of servicing the debt of customers in arrears by increasing the payments of customers in credit. Nice for debtors, not so nice for creditors. I’m not a charity ...

Thanks @Firedog , I had already come to the same conclusion that it’s all regardless of tariff type and was editing my post as you posted yours.

The first thing I should say is that agree with @Firedog  in that I don't think this is wholly nefarious – I do however think that it is a glaring example of crass systemic incompetence and irresponsible desperation to cut costs.

Secondly, the “bug” excuse is laughable and doesn't stand up to even passing scrutiny.

The problem is that, irrespective of what OVO claim, their billing systems are fundamentally trade modules which have been adapted for retail use. As is so common in situations like that, the system was adapted for a particular set of anticipated circumstances and without the operational flexibility you'd expect in a system designed from scratch for retail billing.

Until last year, when the billing cycles were (summarily and without prior notice) all aligned to 31st March, the direct debit system was more or less compliant in that it took a rolling 12 month view when assessing monthly direct debit payments … 12 months is what is responsible because it adds a certain stability, avoids wild fluctuations and allows the customer to budget.

I mention stability here because that is what OVO's own terms and conditions peddle as the goal (I think it was @Nukecad  who was focussed on this at the time and really wasn't given the hearing he deserved).

What happened at the beginning of October last year (or whenever it was that all the billing cycles were changed) is that OVO made a huge change to the way they operate direct debits; but - through either crass incompetence or wilful negligence – chose to do it without making the requisite changes to to their systems.

Hands up, I was vocal in the defence of 31st March, because it made perfect sense in terms of customers budgeting …. I was however gullible and very wrong, because I had stupidly assumed that OVO had made the commonsensical changes to their systems, but after a few weeks of testing on my own account it became abundantly clear that this wasn't the case.

The rolling 12-month connection was lost. EVERYTHING started to revolve around 31st March, which means that the closer you get to 31st March, the more erratic and irresponsible the system's suggested direct debit payments become. Something as simple as earning a £15 reward from Power Move in February will result in your direct debit being reduced by £14 (whereas it would only be a £1 change if direct debits were responsibly assessed on a rolling 12-month basis). Accumulate all those potential unforeseeable credits (or debits) over 12 months and the changes to required direct debit between 1st April and 31st March can be huge.

The same principle applies to all other external factors such as warmer homes discounts, much warmer or colder than expected winters etc. – the closer you are to 31st March the more extreme the impact on direct debits is, because you've lost the smoothing effect of calculating direct debits responsibly over rolling 12-month period.

Come 1st April – the only time of the year in which the system is taking the responsible 12-month view – that all resets and you potentially get a sudden huge upwards adjustment to the required direct debit. You simply can't expect most customers to understand and foresee this.

12 months ago I pointed all this out to Tim and the PZH forum.

I suspect that what has happened here is that now that we are less than 6 months from 31st March, and the system is starting to become erratic again, someone with little or no operational and regulatory knowledge has come up with the bright idea that, rather than fixing the system, you can smooth out these drastic variations by quietly changing to 31st March + 1year …. and that someone (who is equally deficient in operational and regulatory knowledge) has signed off on it because it is both a cheap (ie effectively zero cost) jury-rig solution AND flatters the balance sheet.

The problem for OVO is that the system has not only become wholly irresponsible, it is self-evidently also non-compliant in terms of both Ofgem and BACS requirements – that means both a very public evisceration by Ofgem, but also the very real risk that OVO (and potentially, but unlikely, also Barclays who are their sponsoring bank) will be denied the right to operate direct debits until their systems have been fixed.

@Firedog , you are correct that 'expect' = 'required' as far as Ofgem are concerned.

After the problems a month ago I was already in dialogue with Ofgem about OVO’s direct debits before all this blew up on 1st November, so I’d already checked my facts by the time I started this thread.

I have posted a lengthy reply but apparently my posts are now being moderated.