The existing guidelines prevent specialist water debt collectors, which do not fall under the FCA’s remit because they are not involved in the collection of financial services debt, from being employed.
An Ofwat spokesperson said: “We do not believe that there is a benefit in including this requirement in our guidance, as the FCA does not have any jurisdiction to consider malpractice associated with water debt collection.”
Ofwat added that while non-FCA-licensed debt collection agencies can now be used, it is advising water companies to use reputable agencies that follow FCA best practice.
It said the new guidance would “encourage companies to contractually oblige their recovery agents to follow FCA guidelines when acting on their behalf” in a move to protect customers.
Credit Services Association president Leigh Berkley said: “We welcome this common sense approach by Ofwat, recognising the need for FCA standards of customer treatment, while understanding the role which can be played by agencies who cannot be FCA regulated.”
Operations director from the specialist water debt collection agency Orbit, Tom Somerville, welcomed the new guidance and said the move would retain the services of companies that helped customers in arrears resolve their debt issues.