Ofwat has published guidance for water companies on how to implement, operate and comply with Ofwat's Fitness and Propriety Rule issued on 15 December 2025.

The Rule sets three standards of fitness and propriety - honesty and integrity; knowledge and experience; and financial soundness - and specific factors related to each standard.

The regulator says it will consider an a water company’s approach to the guidance when assessing compliance with the Fitness and Propriety Rule.. It will alsokeep the guidance under review and may update the guidance from time to time to support compliance with the Rule.

The guidance says Ofwat expects the companies to be “open and honest in their engagement” with Ofwat and be proactive in providing relevant information.

“Any failure to co-operate constructively and in a timely manner with Ofwat on the notification of assessments may affect the appointment of people to senior roles or existing senior role appointments,” the regulator warns.

We encourage water companies to engage with us on any queries they may have about the application of the Rule at any time including during the fit and proper person test assessment process.

The Rule incorporates an assessment mechanism (a fit and proper person test, or ‘FPPT’) against which an a water company must assess the fitness and propriety of individuals appointed in senior roles as Chief Executives and other Directors – both Executive and non-Executives.

The Rule requires that water companies implement the FPPT to ensure that only individuals who meet the specified standards in the rule are appointed in senior roles from 1 April 2026 and continue as existing persons in senior roles as from 1 April 2027.

It also requires them to have and maintain robust processes, systems and governance in place to implement the test. Ofwat considers these to include as a minimum:

1. recruitment – both for the undertaker's own recruitment processes and any third-party recruitment consultant; and nominations committees – where they are making recommendations for appointment:
2. monitoring – to identify any changes in individuals' circumstances following appointment and during a performance year which may mean that they no longer meet the FPPT standards and factors;
3. re-assessment - to re-assess annually those existing senior role holders to ensure that they continue to meet the FPPT standards and factors; and
4. reporting - to report the outcomes of implementation and compliance with the rule to Ofwat and to raise with Ofwat any issues when and if they occur in a timely manner.

Click here to download the guidance in full