Defra doubles service failure compensation, and adds more standards from October

The mandatory compensation payments required from water companies to customers who have experienced a service failure at least doubled last week, with some increasing tenfold.

Changes to payment rates for failures already covered by the Guaranteed Standards Scheme (GSS) have been uplifted by the Government for the first time in 25 years, as part of its water reform agenda and to bring payments into line with inflation.

Severe issues such as flooding will see customer compensation double from £1,000 to up to £2,000, while those suffering consistent low water pressure will be eligible to receive up to £250 up from the previous rate of just £25. Payments also cover planned supply interruptions of over four hours where less than 48 hours notice is given; failure to restore supplies on time; appointment making/keeping; and not actioning account queries, payment method change requests and complaints on time.

Both household and non-household customers are eligible, with higher rates in place for businesses on many metrics.

Late payment of GSS entitlements also now attract higher penalties, up from a £10 minimum to £40 for domestic and £100 for commercial customers. Payment amounts will increase in line with the consumer price index when this increases by 10% (using September 2025 as the baseline), rounded to the nearest £5.

In addition, a number of new standards will enter the GSS from 1 October. These relate to: 

• Keeping a Priority Services Register and providing relevant services to registered customers in response to an incident (£100).

• Giving an ‘outstanding charges’ notice and opportunity to pay to customers in arrears, before starting legal or credit reference agency proceedings (£150).

• Reading non-smart water meters at least every 13 months (£40, and £80 for each subsequent 13-month period).

• Installing meters and moving to measured charges on customer request (variable).

• Issuing water quality (such as boil water) notices for longer than 48 hours (£40 plus £20 per additional 24 hours that the notice is in place – £60 plus £40 for non-household – up to a maximum of the customer’s annual water supply bill).