Water flow is running out of secondary pipe leading from Copper Cylinder?

Instead of 100% water flowing out of shower pipe and head I have noticed that the bulk of the water is escaping from the bottom of the unit. Having taken the cover case off I notice that the water is flowing from a small black pipe leading from the copper cylinder and this pipe directs the water down and out of the unit adjacent to where the shower flexi pipe screws to the unit. Can you advise what the problem is and what it will take to fix it?

Jeff
July 2009