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Following consultation, Ofwat has set out minimum principles of board leadership, transparency and governance for water companies to follow. These new guidelines replace those drawn up in the 1990s which were seen as outdated due to a tightening of standards since that time and of increased media interest in governance.
In a move akin to that of the FCA, in drawing up these regulations Ofwat seeks to move “to a less intrusive regulatory approach” in which there is less emphasis on simply meeting regulatory requirements and more on displaying high standards of board leadership and governance. Included in this expectation is that there will be “the correct focus on customers, together with properly transparent reporting.” Ofwat believes that its changes will enable companies “to focus on more innovative and sustainable ways of delivering for customers.”
Recognising that the Water sector is unique with a fairly captive market Ofwat expects companies to have “boards that are equipped to balance the conflicting needs of customers, the environment, the business and shareholders.” The regulations are subject to review should the UK code of Corporate Governance change and, Ofwat hope will result in a change to the culture of the water sector as well as facilitating companies to take “greater ownership of and accountability for delivery to customers, now and in the long term. “