Thousands of water customers could be in line for payouts of £25 after a company failed to tackle their complaints.

Southern Water could be forced to pay back as much as £2.5 million to people.

Company managers have admitted to inconsistencies in tackling customer inquiries and grievances which emerged as they transferred millions of correspondence details into a new customer billing system.

Queries were reportedly being handled within the ten-day standard set out in industry guidelines but the company soon discovered a delay in their response affecting up to 100,000 different cases.

Water companies have to pay out a fine of £25 in compensation costs if they fail to respond to customers within ten days and the admission of recent inconsistencies could cost Southern Water between £1.5 and £2.5 million.

Managers claimed the problems could be down to employees or the new customer billing system and have launched an investigation to uncover the cause.

Les Dawson, Southern Water's chief executive officer, said: "Whatever the money is in terms of compensation then we will pay it and at the moment we know there are between 50,000 and 100,000 events overall affecting our customers.

"We are a monopoly but in a competitive situation one of the things you have to do is respond quickly to customer complaints.

"We are at a loss as to how we got into this situation. It could be human error, a misunderstanding or system processes and we will implement all the recommendations from an investigation."

Southern Water supplies drinking water and treats waste for more than 870,000 people in Sussex and has more than five million other domestic and commercial customers in Kent, Hampshire and the Isle of Wight.

Bosses reported the problems to industry regulator Ofwat and also contacted the Serious Fraud Office.

Government regulators with the Consumer Council for Water (CCWater) have called on Ofwat to take prompt independent action after Southern Water brought in lawyers and a specialist team of accountants to investigate.

Dr Richard Sturt, CCWater chairman for the southern region, said: "We are disappointed and concerned that Southern Water customers have not been getting the level of service reported by the company.

"Ofwat, as the regulator, must act urgently to investigate thoroughly what has happened and take whatever action is necessary to ensure Southern Water compensates its customers fully for any detriment they have suffered."

Wednesday, October 26, 2005