Impartial chairs and greater transparency are vital to ensure Customer Challenge Groups (CCGs) have legitimacy in the eyes of customers, according to new research by the Consumer Council for Water (CCWater).

A Tide of Opinion: The Customer Voice in Price Setting is the first study since the conclusion of the 2014 Price Review to ask water customers what they think a credible CCG would look like when representing their views in the future.

Among its findings the report reveals that customers expect the Chairs of the groups to be impartial and independent - qualities which they believe could be undermined if the role is funded directly by a water company. Instead customers supported the use of a ‘levy’ or ‘pooled funding’ from the water industry to pay for the Chairs in an effort to safeguard their independence.

Tony Smith, Chief Executive of CCWater, said:

“Every CCG must be seen to have legitimacy in the eyes of customers. But that will only ever be achieved with an independent Chair who customers can trust to be completely impartial.”

In terms of existing attitudes, the study says the research has “reinforced a well-understood truth” that general customers have low levels of interest in or engagement with the water industry - and very limited understanding of how it is regulated. As a necessary purchase from monopoly providers, the prevailing view is that there is no motive for water companies to listen to their customers. Attitudes towards water companies  are also coloured by a wider erosion of consumer trust in large corporations, the research finds.

Other key findings from the research include:

• Customers want to have a direct say on their water company’s proposals, with formal research and consultations seen as effective ways of capturing ‘the customer voice’.
• CCWater is seen as the ‘customer expert’ and is expected to play an important role on CCGs, while also ‘sticking up’ for customers outside of the Price Review.
• Chairs and members of CCGs should be appointed through a formal recruitment process, including a public advert and structured interview process.
• CCG membership should be refreshed on a regular basis so the groups hear new voices and avoid becoming stagnated.
• Customers expect CCGs to act transparently, including publishing the minutes of meetings.
• Customers expect to hear feedback from the groups on what they have done.

The research highlights differing views about the role of the Chair quality of a committee as a fundamental issue for the future of customer challenge groups which the industry needs to address. One view is that the Chair is a neutral, unbiased ‘facilitator’ of the group, managing discussions to ensure all voices are heard, with the other viewpoint is that the Chair is the ‘strongest voice’ on the committee: representing customers, leading discussions and informing (even making) the decisions. This contrasting view was not resolved by the research.

Interestingly, while both customers and community representatives believe that payment of the Chair could compromise their independence, the majority of customers would be prepared to accept payment of a Chair is necessary in order to have a Chair of the appropriate calibre.

When prompted, the idea of ‘levy’ or ‘pooled funding’ from across the industry from which to pay the Chair was widely accepted as a good way to mitigate the risk of paid Chairs being “in the pocket” of the water company.

CCWater said it will now work with water companies who have yet to establish their new CCGs to ensure customers’ views influence the set up and governance of the groups, including how the Chair of each one is paid.

Click here to read the research study in full