Customer-focused licence condition

Ofwat customer-focused licence condition logo

Transforming water companies’ performance for customers

Across the water sector there are many examples of where water and wastewater companies are going above and beyond for their customers. However, we know that there are significant improvements to be made.  We still see far too many examples of customers being let down. often repeatedly, with companies failing to appropriately support, communicate, manage complaints and compensate their customers which has a detrimental impact on the overall trust and confidence in the water sector

We are proposing to establish a new regulatory basis for how water companies treat their customers, including customers in vulnerable circumstances. This is in the form of a dedicated condition in the licence of each water company in England and Wales. Licence conditions can help increase companies’ customer focus and encourage the very best service for customers, while ensuring that we have the right mix of tools to effect change when service falls short.

In May 2023 we consulted on our initial proposal to update water company licences to set clear and binding expectations on companies with regards to the service and support they provide to customers in England and Wales. We published the responses we received, our decisions and a further legal consultation in October 2023.

Our new licence condition will set out our expectation that customers’ needs and expectations, including those who are in vulnerable circumstances, should be identified, understood, and met by water companies in their customer service offerings. We will be issuing further guidance to illustrate our expectations of companies in this area.

This licence condition will require companies to treat customers appropriately across the full range of interactions they (may) have with them. It will cover, for example, how effectively they deal with inbound customer contacts, through to the adequacy of support and communication which companies provide when something goes wrong.

We co-created the new licence condition in 2022 working closely with customer bodies, water companies and others.

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

Last updated: 13 October 2023


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 proposing 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 confidence their company will put it right
  • The full diversity of customers’ needs is identified, understood and met by companies in the services and extra help they provide

What the benefits are of the new customer-focused licence condition

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

We expect the new licence condition to empower stakeholders such as charities and customer groups to challenge and influence companies in how they improve their support for customers. Stakeholders across the sector will also be an important source of insight for us in understanding company performance and behaviour in relation to customer service.

The licence condition will provide additional protections for business customers in Wales where there is no choice of retailer. Business customers in Wales will be covered by the same principles as household customers. This will be particularly beneficial for small businesses who may struggle with their limited resources to engage with their water company.

We will continue to engage with other customer organisations and charities to understand customer trends, as well as working on cross-regulatory issues and learning from developments in other sectors in order to develop the guidance underpinning the licence condition.


News and updates

Previous publications and events

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

Next steps

  • We welcome comments on the formal consultation by 23 November 2023.
  • Alongside promoting and raising awareness of the new licence condition, we plan to introduce the new licence condition as soon as reasonably practicable following on from the formal consultation process.

Get involved

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

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.