Poor customer service could cost Thames Water up to £140 million, regulator Ofwat has warned.
The beleaguered water company, which last month was forced to spend £150 million fixing its failing water pipes in an effort to solve its leakage problems, faces a fine close to that amount because Ofwat believes it is failing to provide a sufficient level of service to its eight million customers.
Ofwat released a statement of official notification today, informing Thames Water that the level of the fine would be determined following an investigation by accountancy firm Ernst & Young.
"Notice has to be given within 12 months of the failure to achieve customer service standards. Consequently, the notice applies only to the customer service performance standard failures that have occurred since July 2005," Ofwat said.
"The performance failures covered by this notice are part of Ofwat's wider investigation into Thames Water's customer service performance."
Thames Water originally attracted condemnation from Ofwat after recording a 23.2 per cent increase in operating profit while simultaneously admitting that it was exceeding the acceptable leakage limit by 34 million litres a day.
"From the evidence we have seen it is clear that Thames Water has failed to meet the [required] performance standards," commented Philip Fletcher, chairman of the Water Services Regulation Authority.
"The failures were within the company's control, and some customers have not received the standard of service to which they are entitled.
"This is a clear warning to Thames Water that it must be focused on delivering the services that customers have paid for."
In a separate development, the Serious Fraud Office (SFO) has announced its intention to investigate Southern Water for misleading Ofwat over its own customer service standards.
Les Dawson, chief executive of Southern Water, defended his company's contradictory reporting of its response times for written billing inquiries and service complaints.
"We launched a joint inquiry with Ofwat, bringing in a specialist team of independent investigators to look at inconsistencies relating to the reporting and handling of response levels to customer enquiries and complaints," he explained.
"As a result of information gathered during the course of this independent inquiry and subsequently passed to the SFO, they have now advised us they will carry out their own formal inquiry into this matter."