WIREDGOV

Ofwat yesterday launched a consultation on proposals to introduce fitness and propriety tests for those in senior roles at water companies.  

The new rule will require all companies to assess whether those being appointed in senior positions, including at CEO level, have the necessary skills, experience and financial expertise, based on three core standards:  

• Honesty and integrity – is essential for those in senior roles.    
• Knowledge and experience –individuals must reasonably demonstrate, through their experience and training, that they are qualified and well-suited for the role they are applying for. 
• Financial soundness – the person in the role must have a sound financial record.   

Companies will be required to provide Ofwat with regular updates for new appointments to relevant senior roles and an annual summary of the re-assessment of existing senior role holders’ compliance with the rule.  

The consultation will be open until 23 October 2025, after which Ofwat will consider the feedback before issuing the final rule.    

Ofwat has acquired new powers under the Water (Special Measures) Act 2025, including banning bonuses for underperforming water company bosses and requiring companies to involve their customers in decision making. This consultation on fitness and propriety is a further component of the Act’s powers. 

Helen Campbell, Executive Director, Delivery at Ofwat said:  

”With our new powers from government, we are ensuring that water company executives demonstrate that they meet high standards of behaviour, competence and financial soundness.  Water companies must have robust processes in place to demonstrate how senior managers meet our standards, and Ofwat will take action where companies fall short.  These measures are an essential part of ensuring water companies have a culture that meets the expectations of customers and rebuilds trust in the water sector.”

Water Minister Emma Hardy MP said:

“This government introduced the Water (Special Measures) Act to usher in a new era of accountability in the sector. Yesterday was another example of just that. This consultation will promote the right culture in water companies and deliver transformative change.

“By ensuring that those at the top of water companies meet the highest standards, we are rebuilding public trust, strengthening accountability, and driving change to clean up our rivers, lakes and seas for good, as part of our Plan for Change.”

Following the publication of the Independent Water Commission’s final report, the UK government has set out a new direction for the water sector with the formation of a new regulator in England. This marks an opportunity to reset the sector, so it delivers better outcomes for customers and the environment.  

Ofwat will now work with the government and other regulators to form this new body in England, combining Ofwat with the Drinking Water Inspectorate and including elements of the Environment Agency and Natural England. We will also continue to engage with the Welsh Government and contribute to discussions on the options for Wales.   

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: 

• Consultation – Fitness and Propriety Rule