Ofwat has called on water companies to do more to help customers in debt and to also support consumers at risk of being in debt, to help pay their bills.

In a media statement, Ofwat said performance among water companies in dealing with bad debt varies, but the sector as a whole lags behind its peers.  Ofwat has looked at what companies are doing now to reduce levels of bad debt and other customer costs, and compared water companies’ performance in other sectors. The results are that:

  • water companies have improved their performance on bad debt in recent years but they are consistently out-performed by other sectors
  • bad debt is worse in areas of high deprivation, but some companies do better at managing bad debt even though they have significant deprivation
  • some water companies do better than others, but even the best water companies do not compare well against other sectors
  • water companies could be doing much more to enable customers in debt, or at risk of being in debt, to pay their bills because they do not all use best practice in debt management

Recommendations to companies

As part of Ofwat’s 2019 price review, Ofwat expects water companies’ business plans to demonstrate clearly how they will improve bad debt management in the years 2020-25. When Ofwat review’s companies’ plans, this is one of the areas Ofwat will be expecting them to deliver a step up in their services and step down in their costs.

Companies can take action now to put in place best practice. Tackling the issue of bad debt will help improve customer service, resilience, reduce costs and make bills more affordable for all customers now and for the future.

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.”