Water firms in U-turn over marketing letters that use 'scare tactics'

Letters sent to tens of thousands of households seemingly from their water company requesting an urgent response are actually from maintenance firm HomeServe, which has been accused of using "scare tactics" to flog its pipe cover. If you've got one of these letters, you DON'T have to respond or take out the policy – and if you already have, you can cancel for free.

HomeServe operates on behalf of 13 suppliers, including Anglian Water, Cambridge Water and South East Water, whose customers have reported receiving near-identical letters promoting its plumbing and drainage insurance. They've been sent out over the past few months and use headed paper with the water company's logo. They insist on a response by a specific date and highlight that the highly discounted price will only be around for a limited time.

The letter also fails to make clear that this is an optional policy and you could already be covered for some elements under your home insurance, so you could be paying unnecessarily for cover you don't need.

Want to save on your water bills? See our guide to Cutting Your Costs.

'Nothing short of scare tactics'

We've seen concerns from more than 20 customers from three suppliers: Anglian Water, South Staffs Water (which includes Cambridge Water) and South East Water. These customers have used social media to express their anger at the letters and include Caroline, who said "scare tactics" are being used to try to get people to sign up to the insurance. Here are some of their tweets:

HomeServe was fined £30.6 million in 2014 for mis-selling insurance products, and was reprimanded by consumer group Which? in 2012 for selling potentially unnecessary insurance to thousands of customers under their water provider's branding.

Do you need the insurance?

HomeServe has confirmed you do not need to take out this insurance, so it all comes down to personal choice and the level of risk you're prepared to take. 

The initial 12-month policy is 75p/month in the first year, but automatically renews in the second year, jumping to £10/month. The policy itself is not terrible for 75p/mth, but before taking out any new insurance, check if you're already covered by an existing policy. Speak to your home insurance company first and see our Cheap Home Insurance guide for more tips to cut costs. 

As a rule of thumb, if a pipe leak within your boundary causes damage to your property, you'll likely be covered for the damage to your home under your home insurance policy, but it probably won't cover the repair of the damaged pipe itself.

Some water companies may even provide free repairs to fix damaged water supply pipes, though this is often on a case-by-case basis.

Depending on what you want to protect, it may also be cheaper to self-insure. Instead of paying for the pipe insurance each month, put the same amount into a top savings account to build up your own emergency fund. If you have a problem, the cash is there to pay for it. If you don't, the cash is yours.

How do you cancel?

If you've already signed up to a policy but have since decided it's not for you, HomeServe says you can cancel at any point during your cover and without any penalty. You can do this by calling HomeServe on 0330 0247 002.

What does HomeServe and the water firms say?

After we contacted HomeServe to ask if it would review the content of its letters amid the backlash, it told us: "We constantly adapt and tailor all our marketing and we're grateful for the feedback and the opportunity to reassure any concerns customers might have about any of our activity.

"Our intention was to let people know what their responsibility is in respect of their water supply pipe and make them aware of a completely optional service available to them to protect themselves, with a limited-time special offer."

The water companies, which get commission for policies sold, have also taken steps to address the issue following the backlash.

• An Anglian Water spokesperson told us: "We will review the content of the letters with HomeServe following customer concerns. We appreciate that the products do not appeal to all of our customers and they can opt out of receiving these marketing materials by visiting the Anglian Water Direct website."

• A spokesperson for Cambridge Water said: "We conducted a trial mail-out of the HomeServe marketing letters to around 33,500 (10%) of our customers earlier this year. Following customer feedback about the letters, we took the decision to cancel the trial on 7 June and no further letters have been sent out."

• South East Water told us: "We review HomeServe's marketing materials regularly and are talking to them about how their communications can be improved, particularly on how people can opt out of receiving these letters."

'It smacks of hard selling'

Gary Caffell, energy and utilities editor at MoneySavingExpert.com, said: "The way these letters were written, with the water firm's masthead and a request to urgently respond among other things, understandably left many householders confused and smacks of hard selling.

"It's only right that the firms concerned have listened to the negative feedback and have told us they will think more carefully in future about the content of their mail-outs.

"Remember, if you have received one or something very similar from your water company and don't want the insurance, just bin the letter. And if you have already signed up but have now changed your mind, you can cancel."