Water companies are lagging behind other sectors where it comes to dealing with customers who are struggling to pay their bills, according to a new report from Ofwat.
It is estimated that bad debt currently adds approximately £21 annually to each customer’s bill. Tackling the issue of bad debt now 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 who are having difficulties before the debt becomes too big.
Ofwat is also calling on companies to do more to deal with those customers who can afford to pay, but won’t pay their bills.
To address the issue of customer bad debt, the water regulator 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 customer data so they can anticipate where bad debt issues might occur and then deal with them earlier, before debts build up;
- 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;
- Ensuring that customers are on the most appropriate tariff and payment method;
- Looking to other sectors for new ideas on ways to deal with customer debt; and,
- Ensuring there are real consequences for those customers who can afford to pay, but choose not to do so.
Responding to the report, Water UK, the body which represents all the UK water companies, said:
“Although water bills usually cost households just over £1 a day we know that many people can struggle to pay, and the industry therefore provides support measures of over £40 million each year to vulnerable customers. The water sector is proud of its unique statutory commitment to maintain supply to those who are struggling to pay their bills. However, some consumers do refuse to pay and we are working hard to tackle such situations and minimise the impact of any bad debt.”
Click here to download the Retail Services Efficiency benchmarking Report for Ofwat in full
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