Ofwat has confirmed what customer service levels will be required of water companies when licence conditions change on 12 February 2024.
The regulator will replace current condition J with a customer-focused condition aimed at driving change in what companies deliver for consumers, particularly those who are vulnerable.
Ofwat said companies will be held to account if they fail to adequately support customers or householders are repeatedly let down or harmed.
“The modifications we have made establish a new regulatory basis for how companies treat their customers, including customers in vulnerable circumstances, in the form of a dedicated condition in the licence of each water company in England and Wales,” Ofwat said.
It places enforceable obligations on each water company to meet the licence requirements or risk penalty. Ofwat added that the new condition addresses “a significant gap” in its regulatory toolkit to ensure consumers are receiving excellent service in all circumstances.
Ofwat worked with consumer group CCW to develop the expectations that it hopes will raise standards across the sector and ensure no customer or group of customers is disadvantaged in the level of service they receive.
All 17 English and Welsh water companies as well as new and variation (NAV) companies participated in consultations and development work and showed “overwhelming support” for the changes, Ofwat said.
Although concerns were raised about the speed at which it will be implemented by some companies, Ofwat remains committed to implementing it as soon as possible and argued that sufficient notice during the development of the changes had been given.
The regulator said adhering to the new condition will put the customer experience at the heart of decision making and processes by water companies.
Ofwat first floated the licence change 18 months ago and has subsequently developed what the condition should include and what outcome is intended with stakeholders.
Each water company must meet the conditions set out in its licence to deliver water, and sewerage, services for customers. Ofwat can enforce against companies that breach the specific terms of a licence.
Until last year, the regulator did not have the power to modify licences without the consent of water companies. It was granted this power through the Environment Act and first used it to block dividend payments if it believes a company’s financial resilience is at risk.
Protecting vulnerable consumers and promoting equity of services for all billpayers has risen up the regulatory agenda, pushed by CCW. For the next price review, Ofwat is assessing changes to how the customer performance commitments are measured with more benchmarking of service providers from other sectors as well as measuring water companies against one another.