Water companies can now be fined for poor customer service

Water companies face fines for poor customer service from today (12 February).

Ofwat has announced that a new licence condition has come into force, which could see the regulator impose fines of up to 10% of the company’s turnover.

Ofwat said the condition, first proposed in March last year, was to redress the “distinct lack of customer service requirements” companies are currently subject to.

It said this would be a key tool for driving up performance and Ofwat could hold companies to account to ensure they meet “the full diversity of customers’ needs”.

David Black, chief executive at Ofwat, said: “From today we are putting water companies on notice to improve customer service and where we see failure, Ofwat can and will take action which could result in significant fines.

“Our new powers to issue fines for poor levels of service are part of a range of measures Ofwat has recently introduced including on environmental protection, company dividends and executive pay, to drive better performance and to hold water companies to account.

“We expect this new licence condition to deliver real improvements in customer service across the sector. It is in the companies’ interests to put customers at the heart of their business and provide levels of service that increase customer satisfaction.”

The six parts of the new condition are:

• The Appointee is proactive in its communications so that its customers receive the right information at the right time, including during incidents.
• The Appointee makes it easy for its customers to contact it and provides easy to access contact information.
• The Appointee provides appropriate support for its customers when things go wrong and helps to put things right.
• The Appointee learns from its own past experiences, and shares these with relevant stakeholders.
• The Appointee also learns from relevant stakeholders’ experiences and demonstrates continual improvement to prevent foreseeable harm to its customers.
• The Appointee understands the needs of its customers and provides appropriate support, including appropriate support for customers in vulnerable circumstances, and including during and following incidents.
• As part of meeting the principle above, the Appointee provides support for its customers who are struggling to pay, and for customers in debt.

The new terms replace the existing condition G that specifies companies need to publish and make available specified information for customers. It states the need for a complaints handling procedure and to provide specified information with bills. The current condition J would be removed when the new condition is introduced with expectations for service levels for billpayers.

Customer satisfaction scores with all water companies have fallen since 2020, as measured by Ofwat using C-Mex scores. Meanwhile research by CCW showed trust has declined and complaints have risen.

Environment secretary Steve Barclay said: “We expect water companies to ensure customers are properly supported when services are disrupted.

“Enforcement action for poor customer service is an important and necessary step to restoring trust in the water sector and has been made possible thanks to government giving Ofwat increased powers to modify the licences of companies in England under the Environment Act.

“We are driving forward more investment, stronger regulation and tougher enforcement through the Plan for Water and will continue working closely with regulators to improve outcomes for both customers and the environment.”

Mike Keil, chief executive of the Consumer Council for Water (CCW), added: “Every water company should provide excellent customer service but too often through our research and the complaints we handle we see people being badly let down, particularly by poor communication.

“A complete change in culture is needed in some companies if we’re to improve people’s experiences and repair fractured trust and the new customer licence condition can help to focus minds.”