Southern in £2.5m probe
Soutern Water may have to pay up to £2.5m in compensation to customers after irregularities were discovered in its queries and complaints procedures.
In an unprecedented move the company, which supplies water and sewerage services to 2.3m homes and businesses, has informed industry regulator Ofwat that it may have misled the watchdog over the level of customer enquiries and payments it had reported.
It has even informed the Serious Fraud Office about the matter, although a spokeswoman said there was no reason at the moment to suspect any employees had benefitted financially.
Southern Water, whose majority owners are Royal Bank of Scotland and Veolia, has to comply with Ofwat’s Guaranteed Standards Scheme along with other water companies.
Under the scheme, it must pay £20 compensation if it fails to reply within 10 working days to letters of complaint about water or sewerage services.
A £20 payment is also due if the company fails to respond within five days to written requests to have a payment system changed. Southern Water staff who have been working on installing a new customer billing system for the company have discovered irregularities in the way it handles these procedures in the past few days.
Although it has not been able to put a figure on how many customers have been affected by the irregularities, it estimates that between £1.5m-£2.5m might have to be paid out in compensation. The company made pre-tax profits of £184m this year.
A team with representatives from accountants KPMG and law firm Linklaters has been drafted in to investigate. The probe will be led by Les Dawson, new chief executive of Southern Water’s parent group.
An Ofwat spokesman said: “We are taking very seriously the statement made by Southern Water. Customers’ interests must be protected.
“Southern Water has given us an assurance that customers who have been disadvantaged will be reimbursed. A priority will be that all facts come to light and that lessons are learned.”
Southern Water said: “The company is determined to improve its services. For this reason we alerted the authorities and are acting in full cooperation with them.”