Severn Trent supplies water to eight million customers

The firm said an independent inquiry had shown that the issues raised "had no effect upon the integrity of the group's accounts".

Severn Trent said it proved that water customers had not been overcharged.

Yet the disciplinary action was now being taken because some employee actions fell short of "high standards".

An undisclosed number of staff are now being studied.

"Accordingly, a disciplinary investigation has been instigated and other action is being taken as necessary," Birmingham-based Severn Trent said in a statement.

"Severn Trent is committed to maintaining ethical and professional standards which support compliance with laws and regulations and seeks to safeguard effectively the interests of customers and shareholders."

The company appointed accountancy firm PricewaterhouseCoopers to carry out the independent inquiry after an employee made allegations about its accounting and regulatory returns to regulator Ofwat.

Severn Trent has eight million water customers between the Bristol Channel and the Humber.