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Social landlord says tenants not affected by collapse of water company

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Social landlord says tenants not affected by collapse of water company

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Published by Max Salsbury for 24dash.com in Housing and also in Communities, Finance

Households to benefit from 4% drop in water bills - Ofwat Households to benefit from 4% drop in water bills - Ofwat

A social landlord has said that its tenants did not experience any financial loss or loss of services when a water company folded last year.

Housing & Care 21 was caught up in the collapse of bill management firm Smartsource Water in September 2013.

The Reading-based water company claimed it could reduce customers’ water bills by more than 8%.

Smartsource was wound up after it stopped paying water companies and customers fell into arrears.

Both Housing & Care 21 and fellow social landlord Hanover Housing Association fell foul of the firm’s collapse, losing around £750,000 between them.

However, Housing & Care 21 said that it reverted to direct payments to ensure its tenants were not affected, and that the financial impact on the organisation was “very negligible and therefore did not impact our financial security in any way”.

Meanwhile, a spokesperson for Hanover said: “Hanover entered into a water brokerage contract with Smartsource in June 2012.  Under the terms of this, Smartsource would manage Hanover's communal water bills, with the intention of saving money for residents.

“A number of concerns and issues arose around the contract, and as soon as Hanover discovered this, we initiated enquiries and suspended payment.  This led to us taking the decision to terminate the contract, with effect from May 2013.”

Hanover says that it tried to reach a final agreement with Smartsource when it became clear the troubled company owed it just over £500,000.

The social landlord initiated legal action but at the end of September 2013, Smartsource were declared bankrupt, leaving Hanover as an unsecured creditor.

Hanover said: “No residents lost any money as a result of this issue. The payment of all water bills has been taken back in house and is being administered successfully by our finance team.

The 19,000-home provider reported the issue to the Homes and Communities Agency (HCA), and employed external advisers to look at its procedures and whether there are “any lessons we could learn to ensure this does not happen again”.

Hanover’s steps to learn from the debacle include a “rigorous review” of its procurement processes, training right across the organisation, and action to improve the way in which it investigates new suppliers and manages contracts.

A HCA spokesperson said: “While we do not comment on individual cases, we are aware of issues at a small number of providers relating to contracts with Smartsource water and are speaking to each provider as part of our normal regulatory engagement. 

“It is for boards to ensure compliance with the regulator’s standards and where a commercial decision results in a significant loss this may lead us to raise questions over compliance, with any failure against our standards reflected in published regulatory judgements.”

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