Scottish Water faces probe in insurance row

SCOTTISH Water is to be investigated by the consumer watchdog over its commercial relationship with an insurance firm, which critics have claimed could mean customers paying for policies they do not want.

The state water provider has come under fire for a deal with home emergency insurance company HomeServe, which uses the Scottish Water logo to market its products.

Householders have been sent unsolicited letters from HomeServe advertising its service for water supply pipe cover. But the company displays the logo of Scottish Water – for which it pays an undisclosed sum every year – at the top of the letter in a larger font than its own.

Consumers claim that the letter could leave people believing they have received a bill from their water provider, rather than an advert for an independent commercial service.

Now, Consumer Focus Scotland, which recently took over the responsibility of the water watchdog north of the Border, has said it will launch an investigation into the relationship between the two firms. Scotland on Sunday can reveal that 69 formal complaints have been made about HomeServe over the past five years.

MSP Stewart Maxwell has written to Scottish Water, the Office of Fair Trading and the water industry watchdog to complain.

“In the past few months I have been contacted by constituents regarding direct mail they have received from HomeServe Insurance,” he said. “In both instances, letters had been received by an elderly person who had confused the letter with what they had assumed was a bill from Scottish Water.”

In Scotland, water bills are paid as part of a householder’s council tax, but some people, particularly vulnerable or elderly residents, may not be aware that they do not have to pay Scottish Water directly.

John McFarlane, 60, discovered that his 94-year-old father believed a letter from HomeServe was a bill from Scottish Water and was planning to write a cheque, until his son stopped him.

“It was extremely misleading. It just wasn’t right. I could see why my father thought it was from Scottish Water – it had their logo all over it,” he said.

“It makes me angry, as this is a government body owned by us, but no-one seems able to reel them in and stop them behaving in this way. To send 90-year-old people letters charging them for insurance which they do not want, and in some cases might not need, is irresponsible.”

Maxwell said: “I am very concerned that the use of the Scottish Water logo on this correspondence is presented in a way which is misleading customers to pay for an optional insurance service that they do not need.”

He said previous complaints to Scottish Water had resulted in the company pledging to keep an eye on HomeServe’s marketing materials, but he insisted the measures had not been sufficient.

“Scottish Water has insisted that HomeServe change the logo style to clarify that it is not from Scottish Water directly, but rather from HomeServe Insurance introduced by Scottish Water,” said Maxwell. “However, I do not believe this goes far enough, and I have written to the Scottish Government to make my concerns known.

“To eliminate any confusion, the Scottish Water logo should be removed from the front of the envelopes concerned and the HomeServe logo should be given more prominence in any correspondence.”

In a letter to Maxwell in July, former industry watchdog Waterwatch Scotland, which was incorporated into Consumer Focus Scotland a month ago, said it had “concerns” over the issue but admitted that the practice was not illegal.

Consumer Focus Scotland, which now holds responsibility for consumer water complaints, said it would investigate the issue.

“We are aware that there have been some concerns over the relationship between Scottish Water and Homeserve,” said Trisha McAuley, deputy director of Consumer Focus Scotland.

“We will be investigating these issues in the near future to ensure that the concerns of consumers are adequately addressed.”

A Scottish Water spokesman said the company was considering changing the style of logo it allowed on the letters as a result of the complaints.

“We take our responsibility to customers extremely seriously and would not want to cause any concern, uncertainty or confusion,” he said.

A spokeswoman for HomeServe said the company would conduct a review of the letter.

“HomeServe takes great care in the way it presents its materials, with monitoring processes to ensure that our financial promotions are clear, fair and not misleading,” she said.

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