Speaking on Radio 5 Live this afternoon, Martin Lewis was answering questions from concerned listeners who’ve been caught up in the recent energy firm crisis
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Martin Lewis has explained whether you need to cancel your direct debit if your energy firm goes bust.
The MoneySavingExpert founder has been addressing the energy crisis, with nine firms collapsing in the last month alone affecting around 1.7million homes.
IglooEnergy, Symbio Energy and ENSTROGA all ceased trading today leaving 233,000 people without a supplier.
Green and Avro Energy were the next to go under, both collapsing on September 22.
Energy companies are struggling under the costs of rising gas prices which are increasing at eye-watering rates.
Since January, gas prices in the UK have risen 250% – including a 70% jump from August alone.
The crisis has led to fears that more energy suppliers could follow suit and stop operating in the coming weeks and months.
Speaking on Radio 5 Live this afternoon, Martin was answering questions from listeners who’ve been caught up in the energy firm crisis.
He was contacted by one listener from failed People’s Energy who asked whether they should cancel their direct debit due on October 1.
“I’ve been contacted by British Gas but no firm date for moving to them,” she said.
Martin explained how the regular Ofgem says there is no need to cancel your direct debit if your energy firm has collapsed.
However, for peace of mind, you can choose to stop the payment.
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How the gas shortage affects you
Martin added: “They should all be moved across but some people get quite irate when their old energy provider still takes a direct debit automatically when they’re moving to a new one.
“So personally, I’d probably cancel it.”
The general advice from Ofgem if your energy supplier has gone bust is to sit tight and wait to be contacted by your new provider.
You’ll be switched onto a variable tariff protected by the energy price cap and any credit will be transferred too.
But on its website, Ofgem says you can cancel your direct debit if you want to, even if you haven’t been switched over yet.
“You will continue to move to your chosen supplier if you already have a switch in progress,” it explains.
“You don’t need to do anything. Your supply won’t be disrupted and it should only take us a few days.
“Ofgem’s safety net will protect your supply and any credit balance.”
Speaking last week, Martin also told households to screenshot their online energy bill now – even if they haven’t seen their energy supplier go bust.
This is because if a supplier does go under, you’ve got a document of your most latest energy usage.
Similarly, it is helpful to do this if your provider has already gone under – as long as you can still get on their website – so you’ve got an accurate reading for your new company.
Speaking on his ITV show last week, Martin said households on the energy price cap – mostly those on standard variable tariffs – are now on the cheapest deals.
The energy price cap is increasing from this Friday (October 1) meaning a rise in energy bills for 15million households.
Those on default tariffs paying by direct debit will see an increase of £139 from £1,138 to £1,277.
Prepayment customers will see a rise of £153 from £1,156 to £1309.