Water firm accused of misleading customers with offer of 'free' insurance

Charge: Watchdogs say many homeowners will forget to cancel the direct debit for insurance they may not need

The utility firm is enticing customers to switch from cheque to direct-debit payments by offering them three months' free cover on drainage repairs.

However, after this period the company starts deducting money from customers' bank accounts - unless they cancel the insurance.

The Consumer Council for Water, an industry watchdog, said that many homeowners will either forget or be too busy to do this.

Thames can then take £2.82 a month from the customer to pay for insurance that he or she might never have wanted in the first place.

The water giant, which has 13 million customers across London and the South East, also fails to make clear that better insurance deals could be available elsewhere.

Thames Water's insurance offer is part of a concerted effort by utility firms to get customers to pay by direct debit.

A spokesman said the insurance scheme complied with consumer protection laws and there were no plans to withdraw it.