A North East water supplier has stopped issuing “frightening” debt collection letters after its tactics were likened to controversial pay day loan company Wonga.
Northumbrian Water was found to be among half of UK suppliers sending correspondence which appears to be from an external debt agency, but is actually from the water company itself.
The news follows June’s ruling by the Financial Conduct Authority (FCA) that 45,000 Wonga customers must be compensated after being sent letters from nonexistent law firm threatening legal action, while similar practices were also highlighted among banks and energy firms.
Northumbrian Water, which stopped the policy earlier this year, used the name Alexander James in large print at the top of the letters, but say it was clearly linked to the company.
In total, 12 of the UK’s largest water suppliers have been found to have taken part in the practice – which water watchdog Ofwat has written to companies with concerns over – while five are still doing it.
Shona Alexander is chief executive of Newcastle Citizens Advice Bureau, which offers free debt advice.
“It is good news Northumbrian Water has stopped using this letterhead and it is disappointing to hear some companies are still using it.
“It is bad practice. By saying Alexander James at the top it looks to the client as a debt collector and that is frightening. Then at the very bottom in small print it says this is part of Northumbrian Water.
“At best it is unfair and causes distress, and at worst it is deliberately misleading.”
A Northumbrian Water spokeswoman said:
“The Alexander James brand was used to encourage customers who were not paying their bill to contact us to talk about a payment plan and to receive debt advice. It was very clear that Alexander James was part of Northumbrian Water Limited.
“We took the precautionary decision to suspend using the brand name the day after the Wonga story broke. After researching why the FCA took action against Wonga, we believe we have complied with best practise as the brand name was registered with relevant financial agencies to ensure transparency and our consumer watchdog, the Consumer Council for Water, was also fully aware we were using this brand name.
“After a review we have now decided that we will not be using the Alexander James brand in the future although our use of it was transparent and compliant.”
Source – Newcastle Evening Chronicle, 16 Oct 2014