Truth be told – can we trust what water companies tell us?

© Horizon
© Horizon

A little while ago, all water only and water and wastewater companies in England and Wales published their annual performance reports for 2015-16. For the first time, we asked them to report not to us – but directly to their customers and other stakeholders about their performance. We also asked them to talk to their customers about what they want to see.

But why?

Well, it’s partly to do with encouraging good practice. But mainly it’s to improve information and accountability to you. That’s one of our big priorities this year. We want customers and other stakeholders to be able to understand company performance and challenge this directly. By challenging companies you can encourage them to deliver the services we all expect.

In previous years, companies reported their performance to us and then we took action where they were not performing well. Now, we want companies to report their performance directly to customers – and this needs to include how they are going to fix any problems or improve their performance.

Information is absolutely central to this strategy. To be able to challenge companies, you need information that you can trust on the things that matter to you. And we are all doing a lot of work to achieve this.

We’re not alone in this. In the Competition and Markets Authority’s recent review of retail banking they highlighted the benefits customers would gain from ‘requiring banks to publish trustworthy and objective information on quality of service on their websites and in branches, so that customers can see how their own bank shapes up’.

But while regulators like us can suggest what needs to be done, what really builds trust is companies taking responsibility and stepping up.

That’s why in August 2016 we were pleased to see ‘Discover Water  arrive to provide an overview of how the sector is performing.

The new website, which launches officially later this year, is an exciting joint effort by Water UK and the water companies, together with full involvement from Ofwat, the Drinking Water Inspectorate, the Environment Agency, Natural Resources Wales, Defra and Welsh Government and the Consumer Council for Water.

For the first time, this overview is published by the sector instead of by the regulators. It is still a work in progress, but alongside Water UK’s previous work on industry statistics and developer services standards, shows the beginnings of culture change in the sector.

So what is our role in all of this?

Companies published their own annual performance reports in July, and we have been working with them to increase the level of engagement and transparency of their information. Companies have to explain to you why their performance has been particularly good or bad, and say what they are going to do to address any problems. We’ve introduced extra requirements to make companies more transparent on their costs, charges, tax, and financial resilience.

We’ve collected a wealth of regulatory information, including the information from the annual performance reports, and we’ve made some improvements to our back-office system that looks after this over the last year. Over the next year, we will introduce tools for sharing information with companies – and eventually, we will make most of our data to everyone from our website.

But while information is important. It is only useful if people actually trust what the companies are saying about their performance.

That is why we have been working with companies since last summer on their approach for showing their information can be trusted (‘assurance’). They had to:

  • identify their key risks, strengths and weaknesses in the way they approached information and assurance
  • discover which issues customers and stakeholders were most worried about; and then implement changes

This has driven companies to make some improvements in assurance of their data, as they have found and addressed problems. Over the summer, we have also been assessing their assurance on our company monitoring framework, and we’ll be publishing our rating for each of them in November. Their rating will decide the amount of assurance they need to give us next year, so it’s an important part of challenging them to improve.

Finally, to help the companies improve further and help you challenge them more, we’ll be publishing a few summaries of performance and assurance over the autumn – including our financial monitoring report, some comparative information about outcomes, and examples of good and poor practice on assurance this year. We’ll also be publishing our updated reporting requirements for 2016-17, which companies will be using to report on their performance next summer.

Trust takes time to build and, while the sector has made big strides this year, we want them to go even further over the next year.

Andy Duff

Programme Director, Finance and governance