SOUTHERN Water is facing a massive £20.3million fine for failures in its customer service operation.

Ofwat, the water industry regulator, is planning to issue the punishment for "deliberately misreporting information" that led to customers receiving a poor service.

Regina Finn, chief executive of Ofwat, said: "Southern Water systematically manipulated information to conceal the company's true performance over an extended period of time.

"The company benefited directly from this misreporting at the last two price reviews, meaning Southern was able to increase its prices by more than it should have done.

"Customers received higher than necessary bills because of the company's deception.

"Southern Water's shareholders will bear the entire cost of this fine - it will not be passed on to its customers. The magnitude of this fine reflects the magnitude of the offence."

Southern Water provides water and waste-water services in Kent, Sussex, Hampshire and the Isle of Wight.

Chief executive Les Dawson said: "I understand Ofwat's intention to fine us for what happened in the past.

"I would like to reassure customers that those historically entitled to guaranteed standards payments have now been paid and that we are well on course to meeting a service improvement plan agreed with the regulator."