Water companies under fire for managing indebted customers

It is estimated that bad debt currently adds about £21 annually to each customer’s bill. Tackling the issue of bad debt now, says Ofwat, will help reduce water companies’ costs, making bills more affordable for all customers.

Ofwat is calling on companies to do more for those who are struggling to pay their bill and to identify customers having difficulties before the debt becomes too big.

The water regulator also said that companies must do more to deal with those who can afford to pay, but simply won’t pay their bills.

To address the issue of customer bad debt, Ofwat is asking water companies to take a number of steps which include:

• Making affordability schemes more available and encouraging more customers to take them up;
• Making better use of the customer data so they can anticipate where bad debt issues might occur and then deal with them early, before debts build;
• Moving to more frequent billing to avoid the difficulty of having to pay one, large bill each year;
• Improving customer communication and making customers aware of the help that is available if they need it.

The regulator also instructed companies to ensure that customers are on the most appropriate tariff and payment method, and that they look to other sectors for new ideas on ways to deal with customer debt.

Notably, Ofwat said companies much ensure “there are real consequences for those customers who can afford pay, but choose not to do so.”

Craig Simmons, head of debt advice at the Money Advice Service, said: “We welcome OFWAT’s efforts to encourage greater support for people in financial difficulty. For those water companies looking to develop their practices, we’d encourage them to consider our resource “Working collaboratively with debt advice agencies – a strategic toolkit for creditors”, which has been created with creditors and debt advice agencies to set out good practice.”

Regulation in the water, energy and telecoms sectors will be discussed at the Household Conference in Nottingham this Thursday.