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Severn Trent must work to restore consumers' trust
Responding to the fines imposed against Severn Trent in court (£2 million) and by Ofwat (£35.8 million), the Consumer Council for Water agrees that a clear message needed to be sent to Severn Trent, and the water industry as a whole, that deliberately misreporting information to the regulator, and taking advantage of customers is unacceptable.
Sir James Perowne, Chair of the Consumer Council for Water Central and Eastern, said: "Severn Trent has within two days had two separate fines brought against them for two unconnected cases of deliberately lying to the regulator.
"While these incidents took place a number of years ago, they have had a serious negative impact on consumer confidence in the company, and the industry as a whole. Severn Trent's new management team now need to show consumers that the company has changed by concentrating fully on customer service, if they are going to rebuild consumers' trust.
"We are disappointed that in the case of the Ofwat fine, the regulator did not consider other ways in which the money could be used to benefit Severn Trent's consumers.
"A precedent for this was set in 2006 when Thames Water missed its leakage targets. Instead of imposing a fine, Ofwat agreed that Thames should invest an extra £150 million of shareholders' money in order to replace ageing pipes. The cost to shareholders was twice as much as the maximum fine that Ofwat could have imposed on the company.
"We would have preferred it if a similar arrangement was made in this situation. We called for Ofwat to reduce customer charges, rather than simply handing money over to the Treasury. It is, after all, Severn Trent consumers who have suffered through the poor service which led to this fine.
"We are working with Severn Trent and the other water companies to make sure that consumers' priorities form the foundation of the next price review."
Ends
Notes for editors
1. The Consumer Council for Water represents consumers in England and Wales.
2. The Consumer Council for Water is the statutory water consumer body, and operates as a non-departmental public body reporting to the Department of Environment, Food and Rural Affairs and the Welsh Assembly Government. It has a committee for Wales, and at local level is supported by four regional committees in England.
3. Our national website is http://www.ccwater.org.uk.
For public enquiries to the Consumer Council for Water, please contact via email on enquiries@ccwater.org.uk, our national number, 0845 039 2837, or via minicom on 0121 345 1044.
The Consumer Council for Water
Victoria Square House,
Victoria Square, Birmingham B2 4AJ
