This site uses the UK Government AccessKeys system
|
|
What's new | Publications | Media centre | Price review | FAQs Update alerts | Consumer issues | Site map | Competition | Contact us |
| |||||||||||||||||||||||||||||||||||||||||
Consumer issues
Debt and disconnection figures 2005-06 Each year we collect information from water companies about the number of water disconnections and other debt related matters such as the number of court actions taken(1). Attached is a set of tables showing the information for 2005-06 (1 April 2005 to 31 March 2006)(2). 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) Disconnection of non-domestic premises due to non-payment of bills fell by 14% during the reporting period from 13,211 in 2004-05 to 11,311 properties in 2005-06. Disconnection of mixed-use premises for non-payment of bills In 2004(3) 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. This view has not changed. Only a small minority of companies disconnect mixed-use premises and those that do tend to assess individual cases. They will only disconnect in restricted circumstances or as a last resort. In 2005-06 only a small number(4) of mixed-use premises were disconnected for the non-payment of bills. The majority of these were disconnected by Dŵr Cymru. Domestic disconnections (table 2) Since 1 July 1999 companies have not been allowed to disconnect domestic customers for non-payment of bills. However, companies can disconnect domestic customers for other reasons, such as if there is significant leakage. Whilst most companies did not disconnect any domestic premises in 2005-06, 702 premises were disconnected during the year, 33% more than in 2004-05. Of those companies that commented the most common reasons for disconnecting domestic premises were either due to the occupier or owner requesting the disconnection or due to the premises being unoccupied. Pre-claims notices (table 3) The number of pre-claims notices increased by 43%, from 5.8 million in 2004-05 to 8.3 million in 2005-06. Most companies define 'pre-claims notices' as written correspondence which warns the customer that they could face legal action for the non-payment of bills. 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 and table 5) The number of county court claims and judgements made about non-payment of domestic bills both fell by 6% between 2004-05 and 2005-06. In 2005-06 over 175,000 and 137,000 county court claims and county court judgements were made, respectively. Most companies report the number of pre-claims notices, claims and judgements based on the actual number issued, and not the number of customers receiving them. Therefore, the numbers will 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 a solicitor's fee when 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 For the companies that could provide information on the number of customers paying by different frequencies and methods, the most common payment method was direct debit. This was typically used by 40-60% of customers. The use of other payment methods varied widely between companies, with cheque and cash payments being popular in a number of areas. 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. Companies continue to use more personalised approaches, such as telephone calls and doorstep collection activities. Many companies also use internal and external debt collection agencies. Making sure that the customer is on the most appropriate payment method is also important. Some companies run charitable trusts and re-start schemes to help domestic customers who are experiencing difficulty which has resulted in the non-payment of water bills. Such assistance can help to encourage an ongoing regular payment habit. The effectiveness of charitable trusts/re-start schemes appears to be mixed, with evidence from different companies showing that between 40-80% of customers maintain payments on their accounts after they have received assistance under the charitable trust/re-start scheme. 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(5) and attachment of earnings(6) appear to be rated as the most effective enforcement methods, but these depend on the customer owning a property or being in employment. Warrants of execution(7) were also felt to be effective by some companies. Whilst some companies have increased their use of the court system, others do not use this route or are using it more selectively because it can be expensive, time consuming and not always effective. Service and Performance Team October 2006 (1) RD10/06, 'Reporting of water disconnections and other debt related matters: 2005-06'. (2) A set of graphs showing the industry level number of pre-claims notices, county court claims and county court judgements for 1995-96 to 2005-06 can be found in RD16/06. This also contains industry level information on levels of debt and associated costs (3) RD14/04, 'Disconnection of mixed-use premises for non-payment of water charges – guidance to water companies'. (4) Not all companies were able to separate out the number of mixed-use premises disconnected for non-payment of bills from the number of non-domestic premises disconnected for non-payment of bills. (5) An order of the court placing a 'charge' on the debtors property, such as a house or piece of land. The charge means that if the property is sold, the charge has to be paid first before the proceeds of the sale can be given to the debtor. (6) A method by which money will be stopped from the debtor's wages to pay a debt and as such will only help if the debtor is in paid employment. (7) Where a bailiff of the court is ordered to seize property to the value of the amount owed by the debtor, to satisfy the debt.  |
© Crown copyright |
Disclaimer & Privacy Statement |