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Consumer issues
Debt and disconnection figures 2004-05 Each year we collect information from water companies about the number of water disconnections and other debt related matters(1). Attached is a set of tables and graphs showing the information for 2004-05 (1 April 2004 to 31 March 2005). Set out below is a summary of the key points arising from the companies' submissions. Non-domestic disconnections for non-payment of bills (table 1, figure 1) Disconnection of non-domestic premises due to non-payment of bills has fallen by 8% during the reporting period from 14,404 in 2003-04 to 13,211 properties in 2004-05. Disconnection of mixed-use premises for non-payment of bills In 2004(2) we set out our view that water companies should not disconnect mixed-use premises for non-payment of bills, where any part of the premises is a private dwelling. Most companies do not disconnect mixed-use premises. Those that do, tend to assess individual cases and will only disconnect in restricted circumstances, or as a last resort. Domestic disconnections (table 2) Like last year, companies were asked about the number of domestic customers they disconnected for reasons other than non-payment of bills. (Since 1 July 1999 companies have not been allowed to disconnect domestic customers for non-payment of bills.) Companies reported that 527 domestic premises were disconnected during 2004-05, 20% less than in 2003-04. Of those that commented, companies said that the most common reasons for disconnecting domestic premises were either due to the occupier or owner requesting the disconnection or due to the premise being unoccupied (typically for health and safety reasons). Pre-claims notices (table 3, figure 2) The number of pre-claims notices has increased by 15%, from just over 5 million in 2003-04 to almost 5.8 million in 2004-05. Most companies define 'pre-claims notices' as written correspondence which notifies the customer of the company's intention to take legal action. These are normally issued in the latter stages of the debt recovery process, prior to a county court claim being issued. They do not include the issue of the first bill. Other forms of contact with the customer, such as telephone calls, are not generally classed as a pre-claims notice. Claims and judgements (table 4, figure 3, and table 5, figure 4) The number of county court claims and judgements made about non-payment of domestic bills increased by 17% and 21%, respectively, between 2003-04 and 2004-05. In most cases the number of pre-claims notices, claims and judgements reported relates to the actual number issued, and not the number of customers receiving them. Therefore, the numbers include double counting where a customer receives more than one pre-claims notice, claim or judgement during the year. Solicitors' fees (table 6) Some companies charge customers a solicitor's fee for issuing a county court claim and add this to the customer's outstanding debt. The amount charged generally increases with the size of the debt, typically ranging from £50 to £100. Payment methods and frequencies Of those companies that were able to provide information on the number of customers paying by different payment frequencies and methods the most common payment method was direct debit which was typically used by 40-60% of customers. The use of other payment methods varied widely between companies. The most common payment frequency was monthly, with around half of customers paying this way. The next most common payment frequency was half yearly. It should be noted that some companies were not able to provide the information in the format required or had to make a number of assumptions in order to provide the information. Effectiveness of debt recovery methods Of those responding, most companies appear to be using a variety of debt recovery methods to try to establish contact with the customer as early as possible and recover the outstanding revenue. Many try to tailor their debt recovery processes according to the individual customer and based on the customer's previous payment history. Many report that the use of more personalised approaches, such as telephone calls, personal visits and doorstep collection activities are effective. Many companies also use internal and external debt collection agencies. Ensuring that the customer is on the most appropriate payment method is also important. Enforcement actions Companies' use of enforcement measures and their ratings of the effectiveness of the different enforcement methods varies widely across the industry. Overall, charging orders and attachment of earnings appear to be rated as the most effective enforcement methods, but these depend on the customer owning a property or being in employment. Some companies have increased their use of the court system. However, others do not use the court route or are using it more selectively because it can be expensive, time consuming and not always effective. Service and Performance Team October 2005 (1) RD 12/05: Reporting of water disconnections and other debt related matters: 2004-05. (2) RD 14/04: Disconnection of mixed-use premises for non-payment of water charges – guidance to water companies.  |
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