Following the introduction of new regulations, water companies in Wales and England could now face fines of up to ten percent of their turnover for sub-standard customer service.
Put in place by Ofwat – the Water Services Regulation Authority – the fines are in response to diminishing customer satisfaction levels revealed in its Water Company Performance Report.
The findings highlighted a worrying trend for water providers, with customer satisfaction currently lower for all companies than it was in 2020-21.
These figures comprise a customer satisfaction and customer experience survey, with both scores having dropped by 3.8 percent and 4.7 percent, respectively, in the past two years.
While these figures refer to the overall level, this is not a case of a few bad apples dragging the score down for everyone else.
Hafren Dyfrdwy is the only company that saw its customer satisfaction score increase in 2022-23, with none of the providers meeting Ofwat’s criteria to be named a top performer.
In discussing the decision to introduce fines to tackle poor customer service standards, David Black, CEO of Ofwat, commented:
We expect this new license condition to deliver real improvements in customer service across the sector. It is in the companies’ interests to put customers at the heart of their business and provide levels of service that increase customer satisfaction.
It’s clear that Ofwat is taking this downward trend very seriously, but will the fines be enough to reverse years of inferior service? And will other organizations follow suit?
When Does it Become a Trend?
In the moment, it’s hard to identify whether something is the beginning of a long-lasting trend or a flash-in-the-pan fad. It’s also tricky to pinpoint precisely who/what the trendsetter was.
Although Ofwat’s decision to threaten companies with fines is a revolutionary step in making customer service a financial risk for organizations, it isn’t the first time that regulators have brought in legislation to combat below-par CX standards.
In July of last year, energy regulator Ofgem introduced the following reforms in an attempt to halt the slipping standards of customer service in the energy sector:
- A non-domestic market review findings and consultation
- A consumer standards statutory consultation
- Minimum capital requirements for supplier finances.
Like Ofwat, Ofgem’s rules aim to bring in a level of standardization that will ensure all customers receive high-quality service regardless of their provider.
So, will Ofwat’s changes be one of the first steps in a new golden age of customer service? Or will water companies look to offset any potential fines by hiking up prices even further?
Regulations don’t always lead to improvements, but if more and more authorities and organizations follow suit and customer service becomes a non-negotiable, then the decisions made by Ofwat and Ofgem could end up radically altering the customer service and CX sector for years to come.