Why does OVO use Direct Debits rather than standing orders?

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.

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?

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!!!!

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? 

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. 

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.

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.  

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.

You don’t need to set up a new Standing order, just to change the amount.

The bank account holder can amend the Standing Order at any time.

Maybe it’s that OVO like to it to be them, and not you, in control of your money.

Given that my monthly payments are always higher than the bill, switching to paying the bill in one go, wouldn’t bother me at all.

Indeed, I’d probably be a few quid better off, each month.

If that’s the case, your Direct Debit is too high. However, if always means for the past six months, that’s to be expected. By paying the same amount each month over the year to cover the projected costs for the year, over the summer you’ll be paying more each month than you’re using - but come winter, you’ll be paying less.
  

That’s not likely, because the rates are significantly lower for those who pay by Direct Debit.

Hey @itsmehere 

Firedog has given a helpful response here:

Just wanted to add the following topics:

At the end of May I had a large solar array installed together with a 30kWh battery. My house is large and we have one ev and one rechargeable hybrid; so we used to consume just over 1000kWh per month, with a direct debit of nearly £300 per month. 
 

Our usage of energy from the grid has dropped dramatically, as we can use all the solar energy that we get including any amount that can be stored on any day in the battery. Over the past 8 weeks we have developed a surplus of more than £500 on our direct debit. 
 

My point is that a direct debit doesn’t suit this situation. Our current usage of energy from the grid is only 25% compared with the same period last year. However, it isn’t yet really possible to predict an accurate rate of usage for each season - even these first two months have enjoyed an exceptional amount of sun and they have included a holiday when the house was empty and obviously not using much energy. 
 

The solution offered by customer support is to change to a standing order. I have enough evidence to set an initial monthly amount low enough to cover actual costs at present and probably eliminate the credit on the account during the winter. In the new year (or earlier if necessary) the STO can be adjusted according to our experience of energy usage as the year progresses. 
 

The OVO website doesn’t really provide for this unknown situation in the first year of solar usage. I want to make regular fixed payments; so simply paying a monthly bill doesn’t work for me. A standing order, which I can adjust from time to time, is a better fit. 
 

Other customers installing solar are likely to face the same problem. Could the website not usefully reflect the sensible advice I was given to cover the unknown quantities involved in the first year of solar use, especially when such use is heavy?

Standing Orders are NOT supported.

If you try to use one, you’ll be booted off of any Fixed Rate Tariff and kicked over to Simpler Energy Pay on Demand - with around 10-12% higher rates. You will also be charged any Exit Fees that may apply to the tariff you were kicked from.

This would also require you to pay the entire bill in full every month, which a Standing Order can’t do.

If this response had come from the company, it would feel somewhat aggressive. Nor is it in line with what the customer care adviser actually advised. 
 

I am already on Simpler Energy precisely because it has no exit fees. I have wanted to keep my option to leave OVO open. However, instead of a standing order, I have now decided to pay bills on a monthly basis, which will mean that, with over £600 credit, I will probably pay nothing at all for at least 3 months (very probably more than that). Thereafter, I will consider my options and may well decide to leave OVO after 15 or more years. 

My goal in writing this is to get someone senior from the company to consider the need of a customer in their first year of solar and battery usage for a more flexible approach to payment.  A standing order would keep some revenue flowing in for OVO, possibly resulting in even more credit building up until it was gradually used up in the winter months. This would create a more even revenue stream for the company and more predictable costs for the customer. After a year, both customer and company would have enough evidence to move back to a more accurate and sensibly reduced level of direct debit. 
 

The company would, it seems to me, be able to make clear that a standing order would be acceptable only in this circumstance of the first year of solar use and for no more than that single year. The refusal of your direct debit algorithm to consider a reasonable reduction will result in a higher debt owed by the company to the customer who allows it to continue. This is not in OVO’s interest and likely to alienate the customer. 
 

I would like to make clear that I am taking the time to write this only because your helpful and responsive customer care adviser asked me to! Without that careful response I would already be in the process of leaving OVO. 
 

Standing Orders cause a LOT of problems, such as having basically no customer protections, can’t be cancelled automatically when you leave, no easy refund mechanism, extra manual work to process…

They’re not scalable to a business the size of OVO.