Fine proposed for water company

Watcher watchdog Ofwat has proposed a financial penalty for Thames Water for short-changing customers and failing to meet standards laid out in industry guidelines.

In January, Thames Water held up its hand, telling Ofwat it had discovered that, according to the Guaranteed Standard Scheme under which all UK water companies operate, it had failed to meet required customer service standards and had failed to make payments owed to customers.

As a result of the problem coming to light Ofwat and Thames Water jointly appointed corporate lawyers Ernst & Young to carry out an independent investigation into these irregularities.

Ofwat also asked Ernst & Young to examine whether there had been any mis-reporting of Thames Water's customer service performance to the regulator.

Although the investigation is ongoing, there is nothing to suggest there has been any deliberate mis-reporting.

Once the Ernst & Young investigation is complete, Ofwat will consider its findings and what further regulatory action may be required, including the total amount of any penalties.

The proposal of financial penalties is an administrative formality which Ofwat must complete before any actual penalty can be imposed.

Philip Fletcher, Ofwat chairman, said: "From the evidence we have seen it is clear that Thames Water has failed to meet the GSS performance standards.

"The failures were within the company's control, and some customers have not received the standard of service to which they are entitled. As a result customers' interests have been damaged.

"It is extremely disappointing that we have had to take this action against Thames Water for its customer service failures, coming on top of the company's breach of its leakage target (see related story).

"This is a clear warning to Thames Water that it must be focused on delivering the services that customers have paid for."

Ofwat will determine the scale of the financial penalty when the full extent of the customer service failures and the company's response is known.

Thames Water has provided an undertaking that it will reimburse customers who did not receive payments under GSS to which they were entitled. The company has also agreed to adjust future prices to its customers if it is found to have benefited from the irregularities.

Thames Water is taking action to improve its customer service performance and the accuracy of the information it reports to Ofwat.

Ofwat will monitor Thames Water's progress in repaying customers, its compliance with required service standards and improving the accuracy of its reporting.

Sam Bond



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