Ofwat consulting on proposed 'fit and proper' tests for water executives

(Sharecast News) - Ofwat launched a consultation on proposals to introduce "fit and proper person" tests for senior executives at water companies on Wednesday, as part of wider reforms to raise standards and accountability in the sector. Under the plans, firms would be required to assess whether individuals being appointed to senior roles, including chief executives, meet three key standards - honesty and integrity, relevant knowledge and experience, and financial soundness.

Companies would also have to submit regular updates to Ofwat on new appointments and provide annual summaries confirming that existing senior managers continue to meet the criteria.

The consultation would run until 23 October, after which Ofwat would consider feedback before issuing final rules.

The watchdog's new powers to impose such requirements stem from the Water (Special Measures) Act 2025, which also allows it to ban bonuses for underperforming executives and compel companies to involve customers in decision-making.

"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," said Helen Campbell, Ofwat's executive director for delivery.

"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."

Water minister Emma Hardy said the move formed part of a wider push to overhaul the sector following the Independent Water Commission's final report.

"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," she said.

The government was planning to establish a new regulator for England that would combine Ofwat with the Drinking Water Inspectorate and incorporate elements of the Environment Agency and Natural England.

Ofwat said it would continue working with the government on the new body and engage with the Welsh government on options for Wales, while maintaining efforts to improve performance at water companies in the meantime.

Reporting by Josh White for Sharecast.com.