Thames Water could be fined £12.5 million by the water services watchdog Ofwat for reporting and customer service failings under proposals announced today.
Ofwat said it planned to fine the company £11.1 million for misreporting of regulatory information and £1.4 million for failings that meant customers received poor service.
Thames Water, Britain's largest water company, said it would challenge the proposed fine, which it described as "totally disproportionate".
The regulator said the company had failed to provide it with "robust information" on its customer service performance.
It also said poor processes and systems within the company led to customers receiving poor service, and they missed out on compensation payments they are entitled to if companies do not meet Guaranteed Standards of Service (GSS).
Ofwat said the fine sent a message to the water industry that non-compliance with the regulator was not a cheap or easy option.
The watchdog's chief executive Regina Finn said: "Water is a monopoly business and until we see a competitive market developing, Ofwat must protect customers by regulating the companies' prices and quality of service.
"To do this we need complete, accurate and reliable information. Misreporting of information damages our ability to regulate the industry and therefore to protect customers.
"Thames's reporting system were inadequate. Deficient systems and low business priority on reporting non-financial data led to these serious failings.
"Our proposal to fine Thames reflects this and gives a clear signal to both the company and the water industry that non-compliance is not a cheap or easy option."
The proposal comes after Ofwat's 2006 investigation into the company's reporting of its customer service performance.
The regulator said the fine was appropriate for the seriousness of the misreporting and customer failings, but took into account the steps Thames Water has taken to remedy the situation.
Ofwat stressed there was no evidence of fraud or deliberate misreporting and Thames Water has taken a "sensible approach" to the situation by investigating the issue, reimbursing customers and co-operating with the watchdog's review.Reuse content