Image description: Two people shaking hands across a desk in an interview. Photo by Mina Rad on Unsplash.

New rules have come into force from 1 April 2026, requiring new water company executives to pass a fit and proper person test to hold these senior positions, and ensure consumers are properly centred in companies’ decision making.

Ofwat says the new Fitness and Propriety rule ensures that all candidates for board director roles meet stringent standards of honesty and integrity, knowledge and experience, and financial soundness before they can be offered their role.

Ofwat says the new rule means water companies will be required to ensure that candidates meet these new standards before they are onboarded. They will also be obliged to report the results to Ofwat, including annual compliance and reassessments as required.

Under the Consumer Involvement in decision making rule, water companies must demonstrate how they are involving consumers in decision making and engaging with their feedback. This will require that customers’ views are not only listened to but used to inform any decisions that will have a material impact on them.

If a company breaches either rule, Ofwat says it may issue a direction for it to follow or face enforcement action if it does not comply.

These powers were given to Ofwat through the Water (Special Measures) Act 2025 to strengthen water company leadership and rebuild public trust in the sector.  As a result of Ofwat’s performance related pay rule, approximately £4 million of potential bonuses were prohibited last year.