A new ombudsman will be set up with legal powers to resolve customer disputes over leaks, incorrect bills and water supply issues.
It will also be able to act for customers collectively to secure compensation in situations such as the Brixham parasite outbreak, when billpayers were forced to contact South West Water individually to secure money they were owed, or after severe water outages.
The changes will bring dispute resolution processes for water in line with other utilities – like energy – and upgrade the current voluntary system of consumer protection that is thought to lack teeth.
In May, a survey by the Consumer Council for Water (CCW), which will have its role expanded under the changes, found trust in water companies had reached a new low, with less than two-thirds of people saying they provided value for money.
The ombudsman will be announced as Reed sets out plans for “root and branch reform” of the water industry, to be unveiled alongside a major review of the sector on Monday.
Reed told The i Paper: “For too long customers have been left stranded with complaints about their water companies, unable to see resolutions to issues that matter the most.
“For the first time this will give customers a free, mandatory and binding way to manage their complaints from leaking pipes, incorrect bills or water supply issues.
He added: “This is only one element of our ‘root and branch’ reforms to make the water sector one of growth and opportunity that serves working people.
Automatic fines for illegal sewage spills
Reed is also looking at a range of other measures to crack down on water firm performance.
A further review by Ofwat or any future regulator in 2027 will meanwhile look at closing any loopholes in the Government’s ban on unfair bonuses for water companies.
Lawrence Gosden, who has led Southern Water since 2022, was awarded £691,000 as part of a long-term incentive plan this year on top of his fixed pay of £687,000, according to the company’s annual report.
Southern Water was banned from paying bonuses last month over a so-called “category 1” sewage spill in the New Forest, Hampshire, in August 2024.
A Southern Water spokesperson said its chief executive’s pay and benefits were decided by a remuneration committee “following protocols and rules set out by Ofwat and in accordance with the law”.
They added: “Lawrence Gosden’s 2025 package includes a relocation allowance, and long-term incentive plan paid by shareholders which marks improvements made during the delivery of our turnaround plan. Both of these payments represent common industry practice.”
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