Record £20.3m fine imposed on Southern Water

Southern Water is set to be fined £20.3m by the industry regulator, Ofwat, for providing deliberately misleading information over its customer service performance.

Ofwat sets strict customer service targets for water companies. If these are met, firms are allowed to raise their prices; if they are missed, they risk fines and caps on future price increases.

In October 2005, Southern Water told the regulator that some of the customer service data it had previously issued had been false.

"It deliberately misreported its customer service performance to Ofwat and systematically manipulated information to conceal [its] true performance," said Regina Finn, Ofwat's chief executive. "The company benefited directly from this misreporting at the last two price reviews, meaning it was able to increase its prices by more than it should have done."

In short, customers of Southern Water received higher bills because of the deception. As a consequence, the utility, which provides water and waste services in Kent, Sussex and Hampshire, has been the subject of a criminal investigation by the Serious Fraud Office. The case was later dropped.

Southern Water's chief executive, Les Dawson, apologised for the deception and said he had "no arguments" with the scale of the fine, the largest ever issued by the regulator.