BBC: Water companies have damaged trust, regulator Ofwat says. High levels of payments to bosses and investors by water companies have damaged customer trust, the regulator Ofwat has said. It has published new rules that will force firms to explain how executive pay is linked to performance and to prioritise customers’ interests. Companies paying dividends above 5% will have to explain why that benefits customers – and not just investors.
And they will have to explain how their bosses’ pay levels benefit customers. The new rules come as the bosses of several water firms prepare to be quizzed by MPs. The company chiefs will be facing the Environment, Food and Rural Affairs Committee later. Ofwat chief executive Rachel Fletcher said: “The decisions some water companies have made on dividends, financial structures and top executive pay have damaged customer trust.” She added the move was “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”.
Greater scrutiny: The Consumer Council for Water welcomed Ofwat’s move. Its chief executive, Tony Smith, said: “It is vital that water companies’ financial behaviour is legitimate in the eyes of customers, and that shareholders and executives are not seen to be rewarded for poor or mediocre performance.” He called it a “long-overdue effort” to redress the balance and restore trust in the water industry”.