Direct-debit penalties hit elderly hard

Direct-debit penalties hit elderly hard

Pensioners and those on a low income are being unfairly hit by businesses imposing increasingly high penalties on those who do not pay by direct debit, say campaigners.

Earlier this month BT increased its quarterly charge to £4.50 for customers not paying by direct debit. This follows similar moves by Virgin Media, formerly Telewest, which charges £5 a month; TalkTalk, which charges £3.50; and Orange, which charges £1 a month.

Pensioner Josephine Graff was dismayed to find out about BT's new charges. 'I don't want to pay by direct debit because the day my pension comes in each month varies, so I would like to be able to change the date I pay on,' she says. 'I still always pay within deadline and have been doing so for 15 years.'

Recent figures from the UK trade association for payments, Apacs, show that the number of people paying bills by direct debit has increased by 5 per cent over the past year. Yet only half of all bills are paid this way and Age Concern has expressed concern that pensioners are losing out from the charges.

'An additional charge for basic necessities, such as a fee to pay by cash or cheque rather than direct debit, disproportionately affects older people,' says Gordon Lishman, director general of Age Concern. 'They are more likely to pay their household bills by cash or cheque rather than direct debit, particularly if they are living on a low, fixed income.'

Ms Graff has now agreed to pay.....continued below

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a monthly direct debit for a fixed amount and receive her bills quarterly. 'I'm now worried I may be faced with paying more money at the end of each quarter, which I really can't afford. I'm working on such a fine margin and I feel like BT are penalising people when they can afford to absorb the cost,' she says.

BT runs a 'social telephony scheme' with lower charges for its poorer customers. It is currently in the process of changing it so that eligibility is linked to benefit payments and not to phone usage. Anyone who wants to know if they are eligible for this tariff should ring 150 from a BT landline, says a spokesman, although those with broadband will not be able to apply.

Geoff Carrington, 56, of Enfield, gets his phone service through Virgin Media, and also resents having to choose between changing his payment method or facing a £60-a-year extra fee for his service.

'I like to be able to decide precisely when my payments go out and vary this depending on which account has more money in it,' he says. 'I've never used this as an excuse to make late payments and Virgin Media has acknowledged this. I am prepared to pay a small penalty for not using direct debit but £60 a year just seems very steep and they refuse to provide a breakdown of this extra cost.'

In a recent poll on the Guardian and Observer website, 55 per cent of people said a charge - such as one for non-direct-debit payment - would be enough to make them switch supplier. Regulator Ofcom says those who are unhappy should, indeed, vote with their feet.

'We know that certain other companies, such as the Post Office, charge less than BT for those who do not want to pay by direct debit, so there is choice out there if people want to move,' says a spokesman.