Thames is one of three water companies that still use ‘rebranded’ debt collection letters to try to recoup some of the money owed to them by customers. The practise was criticised by the BBC as “unacceptable” in a report on Wednesday morning.
In a statement Thames Water said: “When it gets to a final letter, we have found the use of an internally branded debt collection agency approach to be effective and cost-efficient.”
“It is important that we manage the collection of outstanding debt as efficiently as possible, as ultimately the costs are borne by our customers,” it added.
The problem of bad debt, money owed by customers who do not, rather than cannot, pay, adds an estimated £15 to the typical water bill.
Thames Water issues the letters from its wholly owned debt collector subsidiary County Wide Collections after a “long process” of contacting the customer with a series of three letters which “increase in severity”, the company said.
These letters are targeted at those who “won’t pay, not those who can’t pay” and the company said it has “a range of measures in place to help those genuinely struggling to pay”.
In its letters issued via County Wide Collections, it is made “very clear” that it is a part of the Thames Water group, the company said.
A spokesperson from Water UK said: “A few water companies use the internally branded debt collection agency approach to help recoup money owed from those who refuse to pay, rather than those who cannot pay.
“Most companies have never, or now no longer, use this approach.
“There are a lot of rules and guidance for companies that do still use this approach and they must continue to be very careful that they are compliant.”
An Ofwat spokesperson added: “Companies must recover debt effectively, while treating customers fairly. These are monopolies providing an essential public service, so customer trust and confidence is vital.
“Where companies choose to do this it must be consistent with the FCA guidelines. That means companies must be clear and fair, and customers must not be misled or scared into making payments.
“We have challenged those companies who carry on with this practice to report publicly on how they meet the fairness tests outlined in consumer law.
“We also expect them to show how they have worked with the consumer representative, CCWater, in ensuring their communications with customers are fair.”
Gillian Guy, chief executive of the charity Citizens Advice, stated that thwe water companies should pursue debt “honestly and with some sensitivity.”
She added: “These letters are about increasing the level of aggression to get payment and they’re made on the assumption that people won’t pay rather than actually that many can’t.”