Measures to add extra protection for business customers in the water retail market have been approved by Ofwat.
The regulator gave the green light for a code change that will come into effect in April requiring retailers to refund credit balances to customers and make billpayers aware of the risk to their credit held by the water company.
The change was proposed last July to protect business customers whose accounts are in credit because of deposits or advanced payments. It would include any customers whose account closed when a retailer exited the market.
Water retailers will need to increase billpayers’ awareness of the amount of money they have built up in credit, and of alternative payment terms available in the market.
CCW’s senior policy manager, Christina Blackwell, called the changes “an important step towards ensuring business customers are better informed about the credit they have accrued on their accounts”.
She added: “Helping customers understand the potential risk of credit building up through advanced payments and the other options open to them is of critical importance to businesses, particularly those still reeling from the impact of Covid-19.
“This year we’ll be campaigning for even stronger protection for businesses and want to see retailers move towards returning any accrued credit to customers on an annual basis.”
Ofwat undertook research in 2019 and 2020 that suggested credit held by retailers was in excess of £100 million, of which approximately 15% was associated with former customers who changed supplier.
At present, retailers are not required to return credit balances to customers when an account is closed or to inform billpayers when they have accrued credit against their account. Ofwat found retailers generally did not advise customers their credit balance could be at risk if the retailer became insolvent, nor did they highlight that the risk could be mitigated if the customer negotiated new terms or switched to another supplier.
Following a consultation, Ofwat updated the standardised text for retailers to inform all advance payment customers of potential risks of such payment terms.