£9.7M fine for Thames Water

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Ofwat has fined Thames Water £9.7M - 0.7% of the company's turnover - for misreporting information and delivering poor service to customers.

Ofwat proposed the fine in September 2007, because it had found, "Deficient systems and low business priority on reporting non-financial data," which led Thames to misreport customer service information.

Ofway say that this damaged the regulatory process.

Ofwat Chief Executive Regina Finn said: "Thames Water's systems and processes were inadequate and customers lost out. The penalty reflects the importance we attach to reliable, accurate and complete information and gives a clear signal to both the company and the water sector that non-compliance is not a cheap or easy option."

£8.3M (0.6% of 2006-07 turnover) is for misreporting information on customer service; and
£1.4M (0.1% of 2005-06 turnover) is for failing to meet minimum service standards.

Ofwat were keen to stress that there was no evidence of deliberate misreporting, and the fines should be paid wholly by the company's shareholders, and not passed to customers.

The penalty was originally intended to be £12.5M, but was reduced on appeal from Thames. The fine is not too severe, as the maximum financial penalty Ofwat can impose is up to 10% of a company's turnover.

Thames Water Chief Executive David Owens said: "We are pleased that Ofwat have accepted our representations on the level of the fine. This is still a high figure considering that the failures were unintentional, rather than deliberate, but we welcome the reduction.

"Although all the misreporting took place under previous ownership and management, we always acknowledged the company should be held account for these failings, but argued any penalty should be proportionate to the harm done to our customers and the efforts we had taken to make amends.

"We not only accepted responsibility for the errors, alerting Ofwat as soon as we became aware of them, but also voluntarily took all appropriate steps to investigate and rectify the failings and to compensate customers over and above the statutory requirements," he said.