A WATER company that supplies thousands of Hampshire homes was today hit with a £20m fine for deliberately misreporting its poor service to customers.

Industry regulator Ofwat handed down the fine after the utility firm falsely claimed it was meeting response times to complaints.

It gave Southern Water notice of the fine in November.

Ofwat chief executive Regina Finn said: "Southern Water behaved unacceptably in deliberately misreporting customer service performance to Ofwat and systematically manipulating information to conceal its true performance over an extended period of time and the company has acknowledged this."

She said companies must provide accurate and reliable data to protect customers in a monopoly environment.

"We expect companies to comply with their obligations and this fine sends a clear message that non-compliance is not a cheap or easy option," Ms Finn added.

advertisement The £20.3m fine was well below the highest penalty Ofwat could have handed down.

It has powers to fine up to 10 per cent of Southern Water's turnover, which was £567m last year.

Ofwat said Southern Water's shareholders will have to bear the entire cost of the fine. It will not be passed on to its customers.

Southern Water uncovered issues with the reporting of service standards in October 2005, and reported them to Ofwat and the Serious Fraud Office who launched a 17-month probe but didn't bring any charges.

The inconsistencies related to response times for billing inquiries and service complaints from customers.

Southern Water said it had repaid more than £500,000 to customers who had lost out and has apologised for the misreporting.

The firm provides fresh water to more than two million people across Kent, Sussex, Hampshire and the Isle of Wight.