E.On has been forced to pay back £650,000 after it took 1.6 million customers' direct debits for January up to two weeks early on Christmas Eve due to a technical glitch.

The error left households across the country out of pocket over the festive period, with one claiming the nightmare left her 'pennyless'.

The company estimated the mistake could have cost customers at most £427,312 and has agreed to pay this, plus an extra £200,000, into a voluntary redress fund, set up by industry regulator Ofgem to help vulnerable energy customers in the UK.

While most customers were expecting payments for their energy bills to be taken at the start of the new year, they were instead processed on December 24, forcing some to unexpectedly go into their bank overdrafts.

E.On noticed the problem on December 23, told Ofgem, and refunded most customers on December 29 and December 30.

But, on New Year's Eve, E.On discovered another 110,060 affected customers who had not previously been identified.

Ofgem said this suggested the company did not act promptly to put things right, as it is obliged to under the terms of its licence.

Anna Rossington, the watchdog's director of retail, said: 'Ofgem expects suppliers to adhere to the terms of contracts they have with customers, in particular the agreed direct debit payment dates.

'This failure is a reminder to suppliers that, when making changes to their systems, they need to undertake appropriate checks to avoid any unintended consequences for customers.

'Ofgem is always prepared to work with suppliers who have failed to comply with their obligations but who have self-reported and are determined to put things right, as E.On has done.'

Ofgem urged others who believe they suffered similar losses as a result to get in touch with the energy supplier.

The problem happened after E.On tried to change so-called friendly credit hours. These hours are a system to ensure that households with pre-payment meters are not left without energy when the shops they normally top up at may be closed over a public holiday.

Somehow this led to the 1.6 million customers on direct debits - who do not have pre-payment meters - being charged early.

Customer Natalie Vellacott, 39, from Rochdale, told MailOnline that she was saving to pay for building work which is set to take place in January and had £55 taken from her account on Christmas Eve.

It was not due to be taken until January 4.

'I already paid them £46 on 1st December. If I hadn't checked my account today my council tax direct debit may have bounced affecting my credit score,' she said at the time.

'I phoned EON but there's a recorded message about what's happened which says they are returning the money immediately.

'I think they should pay compensation and allow customers to switch if they aren't happy with their service without penalty.

She added: 'The regulator should also be involved. It's not really what I expect from a big name like EON!'

Meanwhile, Naomi Lordan, 36, from the Isle of Wight, said she was left 'pennyless' over Christmas after £150 was taken early.

She claimed: 'I phoned Eon who blamed the fault on my bank, Barclays, even though I had just listened to a recorded message to say there has been a technical issue which has caused the early payment.

I phoned Barclays which told me yes Eon have taken the payment early and they put in a request to have my funds returned, 10 minutes later I had my money back in my bank and can't thanks Barclays enough.'

E.On chief executive Michael Lewis said: 'This error should not have happened and it was unfortunate that it was so close to Christmas.

'We apologised to those affected at the time and I apologise to them again now.

'As soon as we noticed the issue, we took immediate steps to put things right for our customers.'


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