Ofwat is launching a new consultation on proposals to ensure water companies involve consumers and listen to their views in key decisions that have a material impact on them.
This follows action by government to give Ofwat new powers to issue rules about remuneration and governance under the Water (Special Measures) Act 2025.
Joint research conducted with the Consumer Council for Water (CCW) shows that consumers see a role for the public to effect change in the water sector and want to hold companies accountable where they perform poorly and have the greatest direct impact on the public or environment.
Water companies will now, for the first time, not only have to listen to customers’ views and feedback but also must ensure that customers are involved in any decision making that will affect them.
Ofwat has acquired new powers under the Water (Special Measures) Act 2025 to set rules about remuneration and governance. The consumer involvement rule covers three areas:
- Ensuring that companies take decisions with an informed understanding of consumers’ views and preferences
- Creating decision-making arrangements within companies that involve consumers
- Improving companies’ understanding of the impact of past decisions on consumers
The regulator is now seeking views on the proposed rule and guidance and is asking stakeholders to make Ofwat aware of any considerations or challenges with implementation that they foresee.
The proposals build on a consultation Ofwat launched in October 2024 which set out initial thinking on three remuneration and governance rules required under the legislation. The new consultation only focuses on the rule on consumer involvement in company decision-making.
The first rule on performance-related executive pay came into force in June 2025. Rules on fit and proper persons, and the governance of companies more broadly, are due to be consulted on later this year.
The overarching objective of the consumer involvement rule is to ensure water companies listen to, understand, and take account of the experiences and needs of consumers in decisions that most affect them.
Ofwat said this will lead to better outcomes for people and communities, and, in line with the other remuneration and governance rules provided for in the Water (Special Measures) Act 2025, help to rebuild public trust in the water sector.
Subject to the consultation, the Consumer Involvement Rule will cover all types of consumers of water company services, including both household and non-household, and will apply to all water companies and new appointees (also known as NAVs). Ofwat’s intention is for the rule to come into force on 1 April 2026 for incumbent water companies and on 1 April 2027 for new appointees.
In 2027, the regulator also plans to conduct a review of thw rule to evaluate the impact it has had and outcomes delivered, and if necessary, consider what new or revised requirements might be needed.
Deadline to respond to the consultation is 1 October 2025 – click here to download the consultation document
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