Centrepay scandal: energy firm Origin wrongly received funds from welfare payments of former customers

<span>Origin Energy is the biggest user of Centrepay of any energy retailer.</span><span>Composite: Guardian Design</span>
Origin Energy is the biggest user of Centrepay of any energy retailer.Composite: Guardian Design

Energy giant Origin wrongly received money from the welfare payments of former customers via the government-run Centrepay debit system, the Guardian can reveal.

Origin is now the third energy retailer known to have wrongly received money via Centrepay from vulnerable and low-income Australians after they had ceased being customers.

Centrepay gives approved businesses early access to welfare payments, prior to them hitting a welfare recipient’s bank account, a system designed to ensure individuals always have enough for essentials like rent and energy.

Related: How Centrepay plunged vulnerable Australians into debt - podcast

But a Guardian Australia investigation has identified deep and ongoing problems with the system. In one case, the Centrepay system allowed energy giant AGL to continue to take welfare money from more than 500 people who had ceased being AGL customers, resulting in overpayments over a period of years totalling about $700,000. The company says it has now paid that money back.

In other cases, Centrepay has helped to financially prop up a disgraced Christian rehabilitation centre practising gay conversion therapy and forced baptisms, and allowed rent-to-buy household appliance retailers to take excessive amounts from the welfare payments of customers in remote Indigenous communities.

Origin Energy is the biggest user of Centrepay of any energy retailer. The ASX-listed company had 32,894 residential customers paying for their energy using Centrepay last financial year, about 1.8% of its total customer base.

But Guardian Australia can reveal that Origin has also wrongly received money from the welfare payments of people who had ceased being its customers.

A spokesperson confirmed Origin had identified “issues relating to payments made through the Centrepay scheme”.

“We proactively reported these issues to Services Australia, have been attempting to contact impacted customers and are working with Services Australia to process refunds to customers,” the spokesperson said. “We have also strengthened our processes in relation to Centrepay payments.”

Both Services Australia and the energy company declined to say how many customers were affected or how much in welfare payments was wrongly received by Origin.

In response to a question on notice by a Greens senator, Penny Allman-Payne, the government confirmed that it was currently working to return Centrepay overpayments from three utilities companies and three “household services” companies.

Services Australia would not release details of which companies were affected.

A Services Australia spokesperson, Hank Jongen, said that overpayments usually occur when customers do not “update or end a deduction”.

“For example, a customer may set up a regular deduction for their energy provider and forget to update their Centrepay deduction when they move house,” he said.

“There is also a responsibility for the company to make sure their records are up to date. This means keeping up to date with information provided to them from Services Australia.”

Jongen said overpayments are more common in industries which use a process of “bill smoothing”, where costs are spread out across the year to prevent bill shock. Bill smoothing is commonly used by utilities companies.

“Centrepay registered businesses have obligations under the Centrepay policy and terms to notify the agency where overpayments have occurred and to actively seek to return moneys to customers as quickly as possible,” he said.

‘People are unable to pay for essentials’

Kate Allingham, chief executive of Economic Justice Australia, said advocates had been calling for stronger regulation of the Centrepay system since 2013, when a government-commissioned review recommended an enhanced accreditation and auditing process for businesses.

“Here we are, 10 years later, with ongoing reports of people overpaying for services and products,” Allingham said.

“People on Centrepay are suffering as a result, unable to pay for essentials because they are locked into payment deductions through unscrupulous business practices, with systemic issues within Services Australia preventing or delaying people from being able to stop unreasonable deductions.”

She called for reforms to cap the amount of Centrepay deductions that can be taken from payments and said welfare recipients needed to be given greater information about what is being taken from their payments and when.

Allingham called for changes to make it easier for customers to cancel or vary their Centrepay deductions, improvements to the complaints process, and stronger regulation of businesses approved for Centrepay use.

Related: A scheme meant to help people avoid debt is now causing it – Centrepay needs urgent repair | Kate Allingham

Allman-Payne called for greater transparency from the government on the companies that had received overpayments and the numbers of welfare recipients affected.

“Labor needs to be transparent with Australians about precisely which companies are under investigation for this egregious practice, and how many people have been so horribly exploited,” she said.

“And Services Australia must expedite its review of Centrepay to determine how these companies were able to abuse the system, and ensure it never happens again.”

The Financial Rights Legal Centre said it was also concerned at ongoing reports of businesses receiving overpayments via Centrepay.

“No one should have thousands of dollars unknowingly sitting in an account with their energy provider, while they’re struggling to cover other costs like food and medicine,” Julia Davis, the centre’s senior policy and communications officer, said.

“Our sector colleagues report seeing clients who had no idea they had thousands of dollars from overpayments made through Centrepay just sitting idle in an account, leaving them with little funds to pay for essentials.”

“While there are legitimate reasons someone might want a buffer in their account in case of unexpectedly high bills, customers using Centrepay should be notified when they have overpaid and their accounts have gone into credit.”

Services Australia said it acknowledged that improvements were needed to the system and was working to reform Centrepay as a “priority”.

“We’re committed to seeing this process through and won’t be providing further comment on individual businesses regarding Centrepay policy or compliance while it’s under way,” Jongen said.

Ergon Energy, a Queensland-based energy retailer, is also working with Services Australia to return overpayments.

Other significant users of Centrepay – Red Energy, EnergyAustralia and ActewAGL – all confirmed they have not identified any overpayments and are not working with Services Australia to return money to former customers.