Water companies could be fined up to a tenth of their turnover for poor customer service, under new powers given to the water regulator for England and Wales.
Ofwat today said there are too many instances where customers feel let down and their supplier does not have their best interests at heart.
The body already has powers to block firms paying out dividends if performance measures aren’t met and it can also impose fines.
Late last year, fines were handed out to 12 out of the UK’s 17 water firms, including a £73m bill for Thames Water, for missing targets around reducing pollution, leakage and supply interruptions.
The watchdog’s latest performance report showed there has been a fall in customer satisfaction across most of the companies it regulates.
Additionally, September findings from the Consumer Council for Water (CCW) showed that customers of Thames Water and Southern Water, which supply water and provide wastewater services to more than 20 million people in England, are “being let down by a failure to understand and deal with the causes of high levels of complaints from their customers”.
Ofwat said today it thinks being able to dish out penalties to suppliers not treating customers fairly, triggered by a new licence requirement, will “deliver real improvements in customer service across the sector”.
The chief executive of the watchdog, David Black, said: “From today we are putting water companies on notice to improve customer service and where we see failure, Ofwat can and will take action which could result in significant fines.”
Thames Water continues to garner national attention for its £8bn debt pile and a series of public operational missteps while a major investor in the company recently cut the value of its stake by two thirds.