Severn Trent exchanges customer default data to beat bad debt

Severn Trent Water is to share customer default data with a credit reference agency, to improve its payment collection.

The water company has signed up to Equifax Insight’s closed user group, in which it will pool information on customers that default on their bills.

It will be able to access data on a customer’s financial circumstances from other consumer credit providers, which can help distinguish the “can’t pays” from the “won’t pays”.

Jamie Gibson, debt strategy manager at Severn Trent Water, said: “As the level of losses from bad debt rises as a consequence of the economic downturn, it is vital that we find ways to improve our understanding of our customers’ financial commitments, as well as trace gone-aways.”

Bad debt is estimated to add £15 to the average annual bill of each paying household across the UK.

Severn Trent had been using Equifax to access electoral roll and county court judgements for a number of years, to confirm residency.

Gibson said accessing the closed user group database would give a greater depth of knowledge about customers’ credit commitments.

“We believe this will help us support the customers that are most financially vulnerable because we will have a fuller understanding of their circumstances,” he said. “We also believe our customer data will enhance the credit decision strategies of other consumer lenders.”

Yorkshire Water recently entered into a data sharing arrangement with Experian. Unlike Severn Trent, it is sharing data on customers that pay well in addition to those who default.

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Sharing the pain: bad debt in the water sector