WIREDGOV

New rules which came into force yesterday, 1 April, require new water company executives to pass a fit and proper person test to hold these senior positions, and ensure consumers are at the heart of companies’ decision making.

Ofwat’s new Fitness and Propriety rule ensures that all candidates for board director roles meet stringent standards of honesty and integrity, knowledge and experience, and financial soundness before they can be offered their role.

Not only are companies required to ensure that candidates meet these new standards before they get their feet under the desk, but they also need to report the results to Ofwat, including annual compliance and reassessments as required.

Under the Consumer Involvement in decision making rule, water companies must demonstrate how they are involving consumers in decision making and engaging with their feedback. This will require that customers’ views are not only listened to but used to inform any decisions that will have a material impact on them.

If a company breaches either rule Ofwat may issue a direction for it to follow or face enforcement action if it does not comply.

These powers have been given to Ofwat through the Water (Special Measures) Act 2025 to strengthen water company leadership and rebuild public trust in the sector.  As a result of Ofwat’s performance related pay rule, approximately £4 million of potential bonuses were prohibited last year.

Helen Campbell, Executive Director, Delivery at Ofwat said:

“The water sector must regain public trust, and these new rules set out clearly to companies what we expect of them – senior leaders who meet the highest standards of integrity, and companies putting arrangements in place to ensure consumer voices are heard and acted on when making important decisions.’’

Water Minister, Emma Hardy said:

“These new rules, introduced through the government’s landmark Water (Special Measures) Act, mark another important step in restoring trust in our water sector. There is no room for dishonest or inexperienced leadership in one of our most vital industries.

“This government is taking further action to deliver accountability and transparency: banning bonuses for polluting bosses, introducing new MOT-style checks on water company assets and bringing in ‘no notice’ inspections to rebuild customer trust and protect the environment.”

Ofwat is working with the UK and Welsh governments on the implementation of water reforms while strengthening our collaboration with partner regulators.

Until these new arrangements are in place, we will keep working hard to drive water companies to improve performance and deliver maximum value for customers, communities, and the environment.

Notes to editors:

For the consumer involvement rule companies have until the 30 June 2026 to publish forward-looking plans. These plans will set out their overall approach for compliance with the rule, including which arrangements they will adopt over the coming financial year.