Customer-focused licence condition

Ofwat customer-focused licence condition logo

Transforming customer care

In February 2024 we introduced a dedicated condition in the licence of each company in England and Wales to transform the care they give their customers, particularly those who need extra help with their water and wastewater services. We call this our ‘customer-focused licence condition’.

The licence condition will 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.

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Last updated: 9 April 2024

 

What do water companies need to deliver?

We want water customers in England and Wales to get high standards of customer service and support for the full diversity of their  needs.

To achieve this, we introduced a new Condition G 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

The customer-focused licence condition protects household customers across England and Wales – and business customers in Wales that are not able to choose their retailer.

The condition sets out the following set of principles (‘principles for customer care’) which each company must meet:

  • communicating proactively with customers, particularly during incidents
  • being easy to contact
  • providing support for customers when things go wrong and help to put things right.
  • learning from past experiences, sharing these with others, and demonstrating continual improvement to prevent foreseeable harm to its customers.
  • understanding the needs of its customers and providing appropriate support, particularly for customers in vulnerable circumstances and during incidents
  • providing support for customers who are struggling to pay and customers in debt.

Each company must:

  • have policies and approaches to meet these principles and consult with CCW
  • follow their policies and approaches; and
  • explain in an effective, accessible and clear way how they meet our principles

View the customer-focused licence condition wording for water companies mainly or wholly in England – and water companies mainly or wholly in Wales.

The licence condition is supported by a setting out the guidance we deem relevant to the licence condition. We expect companies to take account of guidance listed in our customer-focused licence condition guidance register in considering how best to comply with the condition. This includes:

 

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

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 some of the requirements of them as a regulated company.

We think the customer-focused licence condition will benefit everyone

  • Household customers, including those who need an extra helping hand with services or affording their bills, will get companies to focus on their needs. We expect the licence condition to 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.
  • Anyone will be able to check, challenge and influence the support water companies give to their customers. 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.
  • Business customers in Wales, who are not able to choose their water company either, will also benefit. The licence condition provide extra protection for business customers in Wales where there is no choice of retailer. Business customers in Wales are 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.

Ofwat and customer organisations will work together to develop new rules where we think they are needed to improve standards and protect customers. 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.

 

How will Ofwat use the licence condition?

The licence condition gives Ofwat powers to act against any water company which fails to provide appropriate support to its customers.

We can use a range of tools from informal to formal enforcement action depending on the scenario. Read more about ‘Our approach to enforcement’

We will monitor companies’ approaches to meeting the new licence condition.

If we are satisfied that a company has breached a condition of its licence we can take formal enforcement action to secure compliance, which can include fines of up to 10% of the company’s turnover .

Find out more about our investigations

 

How did Ofwat develop the new licence condition and guidance?

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

Below are the key publications and events in developing the licence condition and guidance, news and updates on our work.