Water firms will link executive pay to customer service, says regulator

5th Jul 2018

Water firms must link executive pay to customer service, new rules from Britain’s water watchdog have stated.

A wide-ranging consultation completed by Ofwat, which saw strong interest from a number of stakeholders, formed part of a programme of work to rebuild trust and confidence in the water sector.

Chief Executive, Rachel Fletcher said: “The decisions some water companies have made on dividends, financial structures and top executive pay have damaged customer trust.

“We have looked in detail at the incentives we give water companies. Through the measures we’ve announced today, we are strengthening the incentive on companies to improve their performance for customers and cutting the rewards that come from financial engineering.

“This is an important step in making sure water companies put customers’ interests and those of future generations, at the heart of all the decisions they take.” Companies must submit their plans to meet the changes by 3 September this year.

Fletcher’s comments reflect calls from The Institute of Customer Service to include customer data in annual reports.

Speaking earlier this year, Jo Causon, Chief Executive of The Institute, said: “The time has come to give genuine consideration to mandating that companies give information relating to customers in their annual reports.

“This could encompass the number of customers and how that is changing, customer turnover, and customer satisfaction scores.

“I would also like to see companies formally reporting on their interactions with customer representatives or committees, and I believe that all Boards should have a non-exec who acts as the champion of the customer and who meets with customer committees and groups.”

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