Ofwat seeks powers to protect customers from possible TPI malpractice

Ofwat wants more powers to enable it to regulate intermediaries in the business water market “ to address any potential customer detriment from inappropriate sales and marketing practices.”

The regulator flagged up its demand for greater influence over third party intermediaries (TPIs) in a consolation launched this week on its draft principles for voluntary TPI codes of conduct. In the consultation o document Ofwat warns: “In particular we recognise that customers are likely to need more protection in the early stages of market opening.”

The codes of practice proposed by Ofwat are governed by its existing powers. But as evidence for its need for greater power, it points to other areas including energy where the Competition and Market’s Authority has granted Ofgem powers to enforce Business Protection from Misleading Marketing Regulations (BPMMR).

“We consider our approach to the business retail market should balance the need to ensure TPIs can play a full role in driving effective competition in the market, and the need to take action (or encourage others to take action where they are better placed to do so) where we become aware of any behaviour of TPIs that may be to the detriment of customers,” said Ofwat.

The water watchdog said its proposed additional powers could be created through an amendment of the BPMMRs to nominate Ofwat as “an enforcement authority in respect of a limited range of the available enforcement provisions.”

While the government has not yet decided to hand Ofwat new powers over TPIs the Department for environment, food and rural affairs has said it will “keep under review whether Ofwat should have powers to prevent inappropriate marketing activities, as Ofgem has in the energy sector.”

Ofwat senior director Richard Khaldi said: “While many TPIs offer valuable services to business customers and will play an important part in the new water market, there have been concerns about the way some TPIs have operated in other markets, such as energy. “We want there to be some form of protection in place for customers to minimise the chances of them being missold and ensure people have access to complete and accurate information.”