Severn Trent Water was today fined a record £35.8 million for ripping off millions of customers and lying to industry watchdogs.
The firm admitted it gave false information to water regulator Ofwat and it provided a “substandard” service to its 3.7 million customers following a Serious Fraud Office (SFO) investigation.
The regulator said Severn Trent’s actions resulted in customers paying higher bills than they should have done and that the company’s behaviour was “unacceptable” and had amounted to “deception”.
Severn Trent today pledged to repay customers by lowering bills by £2.40 per household. The rebate, to be made through this and next year’s bills, equates to a total of £10.6 million.
The firm also faces a further hefty fine for a separate case of misreporting leakage figures following a lengthy SFO investigation sparked by Shropshire whistleblower David Donnelly, who worked in the firm’s finance department.
The 52-year-old from Chelmarsh, near Bridgnorth, claimed the company was falsifying figures to overcharge customers in 2004.
Chief executive Tony Wray blamed the previous management regime for the failings, saying it was “overly bureaucratic” and lacked sufficient controls.
He said he had no idea how much it might be fined for the false leakage charges under the SFO case, saying the company was in “unchartered territory”.
“We fully acknowledge and accept the company is responsible for its failures,” he said. Mr Wray confirmed the firm would be admitting two charges of reporting false leakage data to Ofwat.
Ofwat chief executive Regina Finn said Severn Trent had deliberately misrepresented its performance on measures such as the number of customers who had received no replies to complaints and those who had received late responses to bills.
In a separate inquiry, Scottish Power is facing an investigation by energy regulators into a complaint it abused its dominant position in the marketplace.
The firm, which provides power to homes across North Wales and the Shropshire border, is being investigated under the Competition Act amid claims it constrained the capacity of competitors on the energy transmission.
By Business Editor Amy Bould
15 Comments
the government should ensure that all these corporate fines should be paid into our new bank the northern rock and used to help those affected by the abolishing of the 10p rate of tax, and the cash can be used to assist those who are falling into hardship with their mortgage repayments through negative equity and rising interest rates. this would be an excellent way for this government to get back to one nation politics where we all help each other out when in need.any money doled out is of course a loan. perhaps thatcherism could become extinct, and we can get away from the 3 musketeers embrace all for one and sod the rest..
after all it is our bank let it be so used, it will soon be back in profit and repaying the government and bank of englands loan. i am sorry if this sounds like simple communism but it is not meant to be
they should say to severn trent thatthey have been “fined” 36million but can cut all the users bills to that amount for the year, otherwise who will actually pay the fine, thats right you and me via our new “inflated” bills next time round.
An utter disgrace! They should be nationalised.
Exactly, they can fine them all they like but the bills still go up and up, we all end up paying more every year even when they are found to be overcharging. Nationalise them again.
Other than blame and shame, a pointless exercise - i’d rather have a good quality supply than £2.40 back per year - where do you think they’ll get £10M back from?
Agree with Devon Salopian sentiments “Just where the hell does all the money go from Corporate fines” no doubt into our greedy govt coffers for our poor hard up MPs expenses
Reports say that a vast part of the fine going to the treasury, it should all go to the customers not just part of it, as the government are only to waste it on a new quango or there limited expenses.
Bills go up by cost of living. Other increases have to be approved by ofwat so we won’t have to incur the debt. (Well thats what someone who works their told me anyway)
I would urge Star readers to make a careful note of this story and then watch out for how much pension and payout the outgoing chief executive receives at the end of his tenure of office.
If all of the directors and executives of the comapny were made to pay their share of the fine, we would save our money, and they would barely notice the effect on their massively-inflated salaries and bonuses.
They take the huge payouts for the supposedly enormous responsibility they take on, receiving these payments at the expense of their customers and their workers alike - let them show some real responsibility for once and cough up!
I remember when I first moved to the area in 1983, when I was called a consumer instead of a customer, and the water bill was called water rates instead of water services, it cost me around £35 a year. This years bill is £310 - an increase of around 886% in 25 years (work out the average annual increase).
A small price to pay for being a ‘customer’ and being supplied ’services’, plus hasn’t water changed from the plain old clear wet stuff it used to be to being the plain old wet stuff it still is!
But then being a leftie I didn’t go along with the privatisation of all the essential services that has left this country in the state it is today.
Just a figure on a computer not real money but being laundered to all the big wigs all the same, after watching the apprentice last night ,if these idiots are the future of this country we are all done for!! The working classes pay for it all in the end.Mass exodus anyone?
‘Simon’ you can’t compare todays prices with that of 25 years ago.
‘Bob’ yes I can and I have.
The main reason that the 886% increase is several times the inflationary increase is because of the greed of the shareholding privatisation that occurred within the monopolistic essential services.
Even as a ‘leftie’ I can see some benefit gained from the privatisation on non-essential services such as in telecoms, as the competition involved has driven down prices. But with essential services that are monopolies we are all paying heavily for it.
who fines them and where does the money go, all severn trent will do is put the price of water bills up in order to get their 36,000,000 back.
Instead of fining them why can’t they make severn trent reduce our bills.
Then we can have some of our money back…