Customer-focused licence condition

Ofwat customer-focused licence condition logo

Transforming water companies’ performance for customers

In 2022 we are launching our work with the sector to develop a customer-focused licence condition for water companies in serving residential customers. And we need you to help us.

In our strategy, ‘Time to Act, Together’, we said that we want to see water companies transform their ability to serve customers and respond to the full diversity of customer needs. And we’re using a variety of tools to do just that.

Licence conditions can help increase companies’ customer focus and incentivise the very best service for customers while ensuring that we have the right mix of tools to effect change when service falls short.

To support the sector’s transformation, licences need to provide a clear regulatory basis in relation to how companies treat their customers, including customers in vulnerable circumstances.

Find out more below on how you can get involved and more background to this work.

Last updated: 30 November 2022


What we’re trying to achieve for customers

We aspire to see high standards of customer service and support for the full diversity of customer needs.

To achieve this, we are designing a condition in each company’s licence to focus them on delivering the following objectives (‘outcomes’) for customers.

  • Customers are well informed
  • When something does go wrong, affected customers have the confidence their company will put it right
  • The full diversity of customer needs are identified, understood and met by companies in the services they provide and extra help that they provide

Why we need a new customer-focused licence condition

We are introducing a licence condition relating to how companies treat their customers. This will put the onus on companies to provide good outcomes to all their customers including those who are most vulnerable, and evidence that they are doing so.

This is an important tool which will give us power to take action where we have evidence that a company has failed to comply.

A licence condition will complement our wider regulatory tools, including the 2024 price review, which is our primary tool for regulating companies to deliver affordability.

For example:

  • We have seen through the customer measure of experience (C-MeX) that there have been improvements by water companies in the customer service and engagement they deliver.
  • While C-MeX provides an insight into the experience of the average customer, it does not allow us to monitor the experience of the worst served customers.
  • For these customers, such as those who are consistently poorly served, we know that there is more that can be done to improve their experience.

A new licence condition will encourage companies to focus on the needs of all of their customers and ensure that we have the right mix of tools to effect change when service falls short.


News and updates

Previous publications and events

Below are the latest publications, news and updates on our work.

Next steps

  • We welcome feedback in response to the content of our workshops (or more general feedback on the licence condition via our survey below)
  • We are currently considering all of the feedback we have received so far
  • We plan to formally consult on the licence condition in April 2023
  • We plan to implement the licence condition from Autumn 2023 to April 2024.

Get involved

If you would like to be added to our mailing list, please email: [email protected]

We’d welcome views from any individuals or organisations on what the new licence condition should cover or any other aspect of how it could work.

Please send us your views using our survey form:

We’re particularly interested in views on the following questions.

  • What are the issues and problems with customer service and the support water companies provide their customers currently?
  • What tools might be used (by e.g. Ofwat, CCW, Water UK or water companies) to address these issues?
  • How might a licence condition support addressing these issues?
  • How detailed should the licence condition be?
  • What lessons can be learned from other sectors?
  • How can water companies, customer bodies and others contribute to the design and development of the licence condition?
  • What are the next steps?

You can also send us your views or ask any questions about this work by emailing: [email protected].

We will use the responses we receive to this survey to inform our co-creation work in Autumn 2022. We may also publish them on our website at, unless you indicate that you would like your response to remain unpublished. Please see further terms and conditions of responding to our work below.

We are co-creating the new licence condition working closely with customer bodies, water companies and others. We will also publicly consult on changes before we introduce them into companies’ licences.

Responding to our work

We may publish responses to our customer-focused licence condition on our website at Information provided in response to the customer-focused licence condition, including personal data, may be published or disclosed in accordance with legislation on access to information – primarily the Freedom of Information Act 2000 (FoIA), the Environmental Information Regulations 2004 and data protection law. For further information on how we process personal data please see our Privacy Policy. If you think that any of the information in your response should not be disclosed (for example, because you consider it to be commercially sensitive), you should identify that information and explain why, giving detailed reasons, which we will consider when deciding whether to publish it. Please be aware that, under the FoIA, there is a statutory ‘Code of Practice’ which deals, among other things, with obligations of confidence. If we receive a request for disclosure of the information, we will take full account of your explanation, but we cannot give an assurance that we can maintain confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on Ofwat.


Water companies’ licences

Over 50 million people are served by water companies across England and Wales every day. Residential customers cannot choose their supplier for water and wastewater services, so Ofwat protects their interests. One of the tools we use are companies’ licences.

Each water company we regulate has a licence (called an ‘instrument of appointment’) that sets out the terms and conditions that they must stick to in order to run their business. This doesn’t include everything they have to do in supplying water and wastewater services or as a UK business. But it provides clarity to everyone of our expectations of them as a regulated company.

We can consult on and change individual or all companies licences. If a company does not agree to a change to its licence then:

  • In England, companies can appeal to the Competition and Markets Authority if they disagree with us introducing a new licence condition.
  • In Wales, it would be for Ofwat to appeal to the Competition and Market Authority if companies do not agree to us introducing it.

Further information

Read our ‘Customer-focused licence condition: key questions’ page for more information.