People and businesses in the UK are due a rebate totalling £400 million from energy firms that have held on to cash in unused accounts.

Energy regulator Ofgem says the 'big six' suppliers have held on to closed accounts worth £202 million from domestic customers and £204 million from business customers.

It says about 3.5 million households and 300,000 business accounts are impacted.

“We want to see decisive action by suppliers, individually and collectively, to address this issue and, wherever possible, to ensure that the balances they currently hold are returned to consumers,” said Ofgem chief executive Andrew Wright.

“Where this can’t be done any remaining sums should be used to benefit consumers more generally, and suppliers need to be very clear with consumers about what they will be doing with this money.”

Shadow energy secretary Caroline Flint said it was the latest example of energy companies failing to serve customers.

“If people are paying by direct debit their supplier will have their bank details and should be able to refund any balance when the account closes,” she said.