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Inside ‘rip-off’ bill-splitting firms that could cost over £1,000 extra for energy – how to avoid them
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HOUSEHOLDS are being warned about "rip-off" bill-splitting firms, which could cost thousands of pounds more than paying energy giants directly.
Bill splitting firms, including Split the Bills, Epic Student Bills and Fused promise "unlimited" energy as well as making it easier to pay bills in shared homes.
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However, an investigation by Sun Money can reveal that their tariffs are up to 107% more expensive than Ofgem's price cap, and customers can be charged "excessive fees".
Tom Allingham, student bills expert at Save the Student, says: "We've long warned students against these rip-off bill-splitting companies, as although they might be more convenient, they often charge excessively high prices.
"But it's still shocking to see that they can be more than twice as expensive as sorting your own bills.
"Our own recent research found that 55% of students struggle to keep up their bills at least some of the time, and clearly these companies are only making the problem worse."
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HIGHER BILL WARNING
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Most bill-splitting firms focus on offering "unlimited" deals, which means customers pay a fixed monthly fee.
They are targeted at students and house sharers who are attracted by the certainty of paying the same amount each month.
Unlike traditional tariffs, which are based on actual usage, unlimited energy tariffs are charged at a fixed monthly rate which can be more expensive than paying a firm directly.
James Longley, managing director of price comparison website Utility Bidder says these tariffs "mask higher costs".
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He added: "While customers might think they're getting a bargain, they could end up paying far more than they would with a standard tariff directly from energy suppliers.
"The promise of unlimited energy is enticing, but tariffs often include hidden fees and conditions that aren't immediately obvious."
We checked prices based on a three-bedroom home in London from seven bill-splitting sites: Bunch, Epic Student Bills, Fused, Huddle, One Utility Bill, Split the Bills, and Student Bills Company.
The firms display their prices weekly, making it harder for customers to compare annual costs.
We added them up to create an average annual cost for our investigation.
We found the cheapest average annual bill from a bill splitting service was £1,877.04 a year, from Student Bills Company.
That's £187.04 a year higher than the average energy customer currently pays on the standard variable tariff.
The most expensive was £3505.68 from Huddle, an extra £1,815.68 a year over the standard tariff.
Energy prices do vary based on where you live.
IS IT REALLY UNLIMITED ENERGY?
Bill-splitting firms promise customers "unlimited" or "uncapped" energy plans, but one has a fair usage policy buried within its terms and conditions.
That means if you break this limit then you could be charged extra.
For example, Epic Student Bills caps usage at 21,322kWh for gas and 3,882kWh for electricity a year.
The average, based on a three-bedroom house, is 2,700 kWh of electricity and 11,500 kWh of gas per year.
The limits seem reasonable - but experts warn higher users could be caught out.
James said: "Without disclosing the extra charges for breaching these terms, households with high energy usage could be hit with hefty penalties without a means to calculate them."
Traditional energy tariffs are based on what households use, whereas those with "unlimited" deals could end up paying more - and there's no way to get a refund.
HIGH PRICE FOR CONVENIENCE
Bill-splitting firms argue that they make it easier for customers to split costs, but experts warn that customers are being charged a premium for this convenience.
Andrew Hagger, personal finance expert and founder of MoneyComms says: "Bill splitting firms might seem an easy and sensible way to share costs fairly, but tread very carefully.
"You could end up paying a ridiculous premium for the 'convenience factor' and would be much better off choosing your own tariff directly with an energy supplier based on actual usage as opposed to sky-high estimates."
Customers are also at risk if something goes wrong, as they are not covered by regulators, and there is no way to complain to an ombudsman who can resolve any disputes.
Gillian Cooper, from Citizens Advice, said: "Third party intermediaries in the energy industry - services like auto-switchers and bill-splitters - are unregulated.
"This leaves people facing potentially serious problems and a difficult path to resolving them."
Prior to the election being called, the government had committed to a consultation on regulating these services.
Citizens Advice has warned that whoever forms the next government must continue with these plans.
THE ALTERNATIVES
DIVIDING up bills for those living in a houseshare can be confusing.
However, it’s not as difficult as you may first imagine.
There are plenty of other options to help you set up your bills without relying on expensive firms.
Allocate bills…
It’s wise to allocate a different utility bill to each person in the household.
This can take out the stress of having to rely on one person to sort everything alone.
Once you’ve decided, on who’s covering what, visit comparison websites.
Use comparison websites…
These are anyone’s best friends when it comes to looking for a decent energy, broadband and TV deal.
Examples include MoneySuperMarket, Confused.com and CompareTheMarket.
Make a budget…
Once you've signed up, it's wise to make a simple spreadsheet to help track payments and allow you to budget.
You can do this for free using Google Sheets and it’ll help you keep track and make sure everyone’s paying their fair share.
Once you’ve listed your payment dates, amounts and due dates for each bill you could then get savvy and set up calender notifications or standing orders.
Standing orders will ensure that you don’t forget to pay your share whenever it’s due.
Use savvy apps to help…
App-only bank Monzo can help you better budget for each payment with it's "pots".
Customers can set up to 20 of these and you could assign one to each of your different utility bills to ensure you’ve always got enough money for payment.
Splitwise can help you visualise what each roommate owes in a shared house.
Once you're all on a money-splitting app like Splitwise, you can request payments from everyone, and add comments and due dates.
It makes clear who’s in the red and who’s paid on time.
Never rely on joint bank accounts…
Joint bank accounts may seem like a great idea in theory, but they could damage your credit rating.
If your roommate was to miss a payment it won’t just be reflected on their credit file - it’ll affect you too.
Having a poor credit rating can affect your chances of being able to get the best mortgage, credit card and personal loan deals in the future.
HIDDEN FEES THAT CAN HIT YOUR POCKET
Bill-splitting firms charge a myriad of fees and experts warn these can be "excessive" and confusing to add up, meaning customers could be paying extra unknowingly.
Gillian said: "Bill splitting services can offer poor value and be confusing for people using them.
"We've found that people using bill splitting companies often end up paying excessively high prices compared to finding the cheapest tariff and splitting the costs themselves."
For example, Bunch changes a £10 per month subscription fee to all customers - an extra £120 a year.
Fused charges a £4.63 "unlimited energy tariff" fee per customer, per week, which could add up to an extra £724.26 a year for a three-bed household.
If you don't make a payment on time, you'll also be charged a late payment fee worth upwards of £25.
Plus, if you choose to cancel your contract after the 14-day cooling-off period, you’ll also be charged up to £100 per account.
Huddle, Bunch and One Utility Bill do offer "fixed" energy tariffs which charge customers based on their usage.
Both Huddle and Bunch said these are more popular than their "unlimited" deals.
Huddle's "green saver" tariff costs £2,718 for a three-bed house, whereas Bunch's is £1,961.62 a year, and One Utility Bill charges £2,489 a year.
This is compared to Ofgem's price cap, which is £1,690 a year.
However, if you use less energy than is estimated, you will get a refund - but if you use more, you will be charged extra.
As a result of our investigation, Bunch has removed its unlimited energy offer from its site.
Elliott Herrod-Taylor, founder of Bunch said: "Only 4% of our customers take one of our unlimited packages and I can confirm you have given us the push we wanted to make to remove all unlimited packages from our site."
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Huddle, Split the Bills, Epic Student Bills and Student Bills Company were contacted for comment.
One Utility Bill and Fused declined to comment.
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