watrs independent oversight panel 6 month review 1 april – 30 september 2015 1

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WATRS Independent Oversight Panel

6 month review1 April – 30 September 2015

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WATRS Independent Oversight Panel reviews and makes recommendations about the operation and effectiveness of the Scheme

Regulatory

• Richard Khaldi –Senior Director, Ofwat

• Sir Tony Redmond – Regional Chair,

CCWater

Independent

• Sandra Webber – Chair – former

Consumer Support Director, CAA

• Helen Hunter – Director, J Sainsbury

plc

• Adam Scorer - former Director, Consumer

Futures

Company

• Rachel Barber –Director, South-Staffs

Water

• Gary Dixon – Director, United Utilities

At 6 months, 12 months and then annually

Ensures Scheme follows Scheme principles

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Context: WATRS is new and customer usage lower than expected

April May June July August September0

20

40

60

80

100

120

140

160

Customer complaints eligible to come to WATRSNotification letters issued on request by CCWater

Applications made to WATRS by customersApplications rejected on grounds of eligibility

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Perceived to be fair and impartial by

customers and companies

Effective feedback loops

to drive improvements

in service & identify systemic problems

Accessible to different groups of users – experience of using it good regardless of outcome

Communicated effectively –

appropriately used and

understood

Provides a genuine

alternative to customers

than litigation

Is cost effective

The Panel assesses the Scheme’s effectiveness against 6 agreed criteria

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Review methodology

Panel have read all the WATRS decisions and case summaries issued to date

Written questions sent to CCWater*, CEDR* and all subscribing companies

Representatives from CCWater, CEDR and 4 companies met Panel in October

Independent customer experience and satisfaction research under way by DJS Research Ltd* which will inform 12-month review: only 2 interviews so far

*see Appendix

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Key conclusions

All parties involved in the Scheme have shown commitment to making it work. The Panel is confident that the Scheme has been implemented well against the Scheme Specification.

Take-up of the Scheme has been lower than expected and make it difficult to make a strong assessment of all aspects of the Scheme

The Panel has identified some further ways in which the Scheme could be made more accessible and simple and its impartiality emphasised

The Panel will look further at two issues which could improve confidence in the outcomes of cases: interest payments on awards; and guidelines on levels of awards for non-financial loss. Since the Scheme began the Rules have already been amended to allow awards for non-financial loss where the company has failed to act reasonably

Independent customer research is under way to inform the Panel about user satisfaction and take-up. This will be considered in the 12 month review

It is too early to evaluate the cost effectiveness of the Scheme – this will be considered in the 12 month review

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Effectiveness

Simplify application form – end January 2016

Review guidance to customers: include illustrative examples – end January 2016

Review format of website to make more customer friendly – end January 2016

Review format of decisions: set out what obligations companies have to meet and whether met – end November 2015

Decisions should have greater clarity for customers around independence and impartiality – end November 2015

Greater clarity in decisions where “claim succeeds in part” as to degree to which the claim has succeeded – end November 2015

WATRS encouraged to make appropriate use of panel of experts – end November 2015

Guidelines with examples of levels of awards for non-financial loss, based on other ADR Schemes - end March 2016

Panel to consult companies on awards of interest for overcharging: other ADR schemes make provision for interest payments – end December 2015

Key Recommendations

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Key Recommendations

Scheme Operation

CCW to issue WATRS referral number with closure letter - end November 2015

CCW file to go to WATRS when application made unless customer opts out - end November 2015

Where WATRS clarifies information submitted by one party they give other party opportunity to comment – end November 2015

WATRS to review procedure for dealing with “mass claims”

5 day time limit: will be kept under review but no change recommended

2 day eligibility timescale: will be kept under review but no change recommended

Companies

Set out legislative and policy obligations in relation to the issues raised by customer at start of each defence - end November 2015

Make all redacted decisions available to companies for learning purposes - end November 2015

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KEY FINDINGSThis section summarises the Panel’s findings

against each of the agreed criteria for assessing Scheme effectiveness

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in service & identify systemic problemsAccessible to

different groups of

users – experience of using it good regardless of

outcome



understood

Provides a genuine


than litigation

Is cost effective

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CEDR feedback: Customer satisfaction data

11 responsesHow satisfied or dissatisfied are you with WATRS?Scale 1-5, 1= very dissatisfied 5 = very satisfied

No. of responses

1 2 3 4 5 6 7 8 9 %

5 Very satisfied

27.27%

4 Somewhat satisfied

0%

3 Neither satisfied nor dissatisfied

0%

2 Somewhat satisfied

9.09%

1 Very dissatisfied

63.64%

The limited number of responses to date is too small to enable any significant conclusions to be drawn. CEDR are also responsible for the Communications and Internet Services Adjudication Scheme (CISAS). In 2014 overall satisfaction with CISAS service was 65.5% based on 492 responses (48.6% very satisfied and 16.9% satisfied*)

*source CICAS Annual Report 2014

Perceived to be fair and impartial by customers & companies

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Satisfaction rates are likely to be affected by outcome e.g. the Parliamentary & Health Ombudsman reported (2014) that 88% of customers whose complaints were fully upheld were satisfied but customer satisfaction fell to 53% for customers whose complaints were not upheld.

Compared with the Postal Redress Scheme (also provided by CEDR) where 82% of applicants were unsuccessful and user satisfaction with the scheme (very satisfied, satisfied, neither satisfied not dissatisfied) was 23% (POSTRS 2014 annual report).

Customer response (as at 30 September 2015)

Status Cases %

Accepted decision:Rejected decision:

No response:Pending*:

9558

33%19%19%30%

Totals: 27 100%

*customers have 20 days from date of decision to accept


CEDR feedback: Customer satisfaction data

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Decisions have been consistent and appear to be reasonable outcomes for the customer

Minority of cases an award may be unwarranted e.g. no evidence that adjudicator took into account persistent customer contacts with company or effort company already expended in trying to resolve customer’s complaint

Language may be too legalistic: should be aimed at those who are likely to need to use WATRS;

Awards for stress or inconvenience: a guide to the level of award a customer could expect “may reassure all involved” there is consistency in the financial awards

Adjudicators might benefit from having entire case file from CCWater (which includes any company responses) to enable them to take “a more rounded view of the entire case”

Will enable the application form to be simplified

will benefit customers as not all are able to articulate all relevant points


CC Water feedback

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“awards made look to be very fair and have a balanced approach”; “the decisions appear balanced”

“the issues seem to have been understood”

“we are satisfied that the decisions … have been made by adjudicators who understood the issues involved and had the requisite level of expertise”

“we respect the expertise, knowledge and experience of the adjudicators but do wonder if they are fully utilising the Industry subject matter experts they have available to them.”

“in terms of outcomes for customers we have seen a range of financial values awarded … we feel that it is critical for companies to have confidence in the fairness and consistency of awards made across the industry, therefore we would welcome enhanced transparency regarding value justification e.g. why £50 versus £250…?”

One company (which has not had any decisions issued by WATRS) made the following observation : “the process itself is fair but there is an unfair balance between the interests of the customer and the interests of the company”


Company feedback

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Panel’s view

WATRS must be seen to be impartial. This would be helped if companies had to set out what obligations they had in the case and if the decision’s introduction made clear that WATRS have considered whether the company has met those obligations

Where WATRS clarifies information submitted by one party they should give the other party an opportunity to comment


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different groups of


outcome



understood

Provides a genuine


than litigation

Is cost effective

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Changes in policy or behaviour as a result of the Scheme

CCWater have put in place a team to carry out a final review to ensure all possible steps have been taken before issuing WATRS referral number

Has Scheme enhanced customer service and confidence?

the number of customers requesting a WATRS referral number is low and fewer than half who request a number go on to make an application: need to understand why

low uptake: possible complaint fatigue or after time for reflection are no longer dissatisfied and/or accept that company closure position generally good

“yet to see evidence of the existence of WATRS increasing consumer confidence in the industry”



in service & identify

systemic problems

CC Water feedback

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Positive: Greater effort to resolve complaints satisfactorily before they escalate to

CCWater Updated customer information; “undertaken additional staff training with the aim

of enhancing our own levels of customer service” “will readily embrace [lessons to be learnt] if it means providing an improved

customer experience” Encouraged company to look in greater detail and depth at customer complaints

and to put more emphasis on customer perspective – and understanding what the customer actually wants

Greater emphasis on looking at and dealing with repeat calls and complaints Aware of the potential reputational effect decisions and relative performance

within the scheme may have

Neutral “[we] recognise the need for alternative redress. Incentives already exist for

companies to prevent disputes and where they occur to resolve them quickly, so the introduction of ADR is unlikely to cause significant changes in approach.”

“no reason to alter policies to date”

Negative Danger of driving decision making on a case by case commercial basis rather

than necessarily what is best for customers as a whole

Company feedback Effective feedback loops



systemic problems

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CEDR feedback Positive “buy-in” from all companies during set up period

Good working relationship with CCWater

Positive engagement by companies since start

No non-compliance by companies with decisions where accepted by customers

“most complicated” in relation to all of the schemes they run in terms of subject matter, evidence and issues occurring

Slow start in number of cases, “as expected”

May need to review how “single application/mass claims” applications work after the first application is concluded




systemic problems

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Panel’s view

Insufficient cases in first six months to identify systemic problems

Encouraging signs that companies improving focus on complaints as a result of WATRS being in existence

Sharing redacted decisions with all companies would help to improve effective feedback




systemic problems

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Accessible to different groups of


outcome



understood

Provides a genuine


than litigation

Is cost effective

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No customer feedback to CCWater about Notification letters

Notification letters are issued by CCWater on request after closure of CCWater case file. 124 Notification letters issued as at 30 September 2015*

Telephone access to WATRS difficult

accessible to different

groups of users – experience of using it good regardless of

outcome

* Majority of cases domestic rather than non-domestic customers**estimated

CC Water feedback

Method Contacts

%

No. & percentage by phone

545 50

Email 351 32Post** 200 18

Total: 1096

Website – unique visitors

Page hits by volume

MayJune

218173

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HomepageGuidance Notes

July 262 3 File a case

AugustSeptember

206254

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About usLegal

1113

6 The process

789

InformationPrivacyThe adjudicators

WATRS: contact methods – 1st April – 30 September 2015

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“based on the quality of claims received … there may be a need to provide additional support to customers within the application process … the quality of information provided by customers has not been helpful to their case”

Understanding that some customers who use WATRS may be “vulnerable” is important

Simplifying the application form may help customers to provide “the right information”

“would be a step forward” for CCWater to provide their file to WATRS

Would be good to let customers know the criteria regarding eligibility in the guidance to customers



outcome

Company feedback

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Phone problems Both CCWater and companies reported difficulties in contacting WATRS through the

advertised telephone number. In September WATRS investigated and found that there was an issue relating to abandoned calls. A fault within their telephone system server resulted in some calls being passed through from initial auto attendant into a queue that was not consistently passed to active agents. The Panel was concerned that this issue had not been picked up by WATRS before September.

Actions taken by CEDR to monitor and remedy

Daily tracking of call traffic and investigation of any patterns of abandoned calls;

Working with telephone system vendor to see if call pattern reports can be generated to identify what message triggers call abandonment;

Extra prompt added at start of message on the main line to move customers with active cases through to the case managers more quickly.

Phone line analytics – 1st April to 30th September 2015

Calls received Calls answered within 2 mins

Calls answered in more than 2 mins

abandoned

545 545 0 113



outcome

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Panel’s view

Take up lower than expected, unclear if phone difficulties may have been a significant contributing factor – this will be monitored by the Panel

We are recommending measures which address potential barriers to effective take up and use of the Scheme such as:

Simplification of application form

to allow application form to be simplified and to ensure that the adjudicator has the fullest information about the complaint - CCWater file to be sent to WATRS when application made (unless the customer objects)



outcome

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different groups of


outcomeCommunicated

effectively – appropriately

used and understood

Provides a genuine


than litigation

Is cost effective



understood

The conversion rate for Notification letters to applications is currently low

This is one of the areas the independent research being undertaken by DJS is targeted at, to understand any underlying reasons for this

Where an application form is requested the take up/conversion rate is good and relatively few applications are rejected on grounds of eligibility

Scheme conversion rate comparison

Scheme Enquiries

(application forms sent)

Applications received

Conversion%

WATRS 66 54 81%

CISAS 2331 1952 83%

POSTRS

164 314 191%*

*Application forms and signposting for POSTRS is often conducted by the postal operators directly which accounts for the large conversion rate.

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Customer activity

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There needs to be better sign-posting of what customers will need to provide to prove case: there is a “learning gap” on evidence.

Providing CCWater’s file to WATRS may assist customers in this but customers need to be aware that WATRS is not a discussion process – “one shot” only and they need to put points /quantify losses

Equally companies have not always articulated and included in response all relevant facts

Website may be “too legalistic” and application form too long

Decisions should spell out how WATRS is independent of and impartial in relation to companies, customers and CCWater



understood

CC Water feedback

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Company feedback on communication and understanding

Useful for companies to have access to redacted decisions and not simply case summaries

Sometimes difficult to understand why different levels of compensation have been awarded particularly those in relation to non-financial losses including distress and inconvenience

CEDR feedback from meetings with individual companies

Companies are at different stages of understanding in relation to WATRS

Companies have concerns regarding the ability of the Scheme to deal with more legally complex issues such as sewer flooding and how the Scheme will respond to the effect of retail separation in 2017



understood

Company and CEDR feedback

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Panel’s view

The Panel felt that more could be done to explain the Scheme to consumers such as

Making website more user friendly

Better support for customers from WATRS admin staff when making application but still maintaining the independence of the adjudicators



understood

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Accessible to different groups of


outcome



understood

Provides a genuine


than litigation

Is cost effective

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Provides a genuine


than litigation

This means that WATRS should (within the structure of the Scheme Rules):

A. be able to deal with the type of disputes that commonly arise in relation to the services provided by the companies

B. have cases dealt with by suitably qualified and experienced adjudicators

C. allow the parties the opportunity to set out their position and submit all relevant information and evidence

D. provide reasoned, reasonable and consistent outcomes based on law

E. provides effective methods of enforcement

WATRS purpose is to provide customers with an alternative to the County Court*

*Where the company and CCWater have been unable to resolve a customers complaint

CCWater Categories

Category Cases

Administration 4

Billing & charges

19

Metering 12

Sewerage 14

Water 14

other 8

total 71

CEDR have collected data on the types of claims dealt with by WATRS and since the beginning of September CCWater have been providing data on their classification of customer claims.

Financial limits: In the County Court the relevant small claims limit is £10,000; under the Scheme Rules there are maximum limits for awards (£10,000 household and £25,000 non-household).

Interest on awards: In the County Court there a mechanism for claimants to ask for and be paid interest on any award made. There is no equivalent provision in the Scheme

Provides a genuine


than litigation

A: Ability to deal with common disputes

• The Water (Meters) Regulations 1988 provide that disputes relating to meters (location and potentially billing) should be dealt with by a single arbitrator rather than by adjudication

• The Panel obtained external legal advice that it is possible for the customer and company concerned effectively to agree to refer their dispute to WATRS

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All adjudicators must have a law degree and/or an appropriate qualification as a solicitor or a barrister with a minimum of 2 years post qualification experience and a minimum of 2 years experience working as an adjudicator or arbitrator of business to consumer disputes for CEDR: all decisions issued to date have been made by adjudicators with the relevant qualifications and experience

All decisions follow a standard “template” which sets out the parties, what the customer has asked for, the main issues and whether the claim succeeds in full, in part or is deemed not to be able to succeed

All decisions are currently reviewed by the lead adjudicator before issue to ensure consistency of approach

Provides a genuine


than litigation

B: Qualified and experienced adjudicators delivering reasoned, reasonable outcomes based on law

• % will not equal 100% as excludes decisions published in October

• To date, no applications have succeeded in full; this may be due to a number of factors, including customers not knowing and understanding how to fully set out and prove all elements of their claim

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C: Allows the parties to set out their position, submit all relevant information and evidence?

WATRS is an “evidenced based” process which is administered to strict time-limits. From receipt of a completed application from WATRS companies have 5 days in which to settle or submit a response. If the company wishes to challenge on the ground that the application relates to a dispute which is ineligible (under the Scheme Rules) to come to WATRS it must do so within 2 days. If that challenge is not upheld the company must settle or submit its response within the 5 day window.

The adjudicators do not hear any oral submissions. It is important therefore that the customer can submit his or her application form and supporting evidence and that the company has the opportunity to respond. Adjudicators can contact either party for further evidence if necessary.

Companies: responding to applications Would like to be able to challenge eligibility outside of the 5 day limit to avoid

having to prepare a defence 5 days “very tight” and a “challenge” but “it keeps you focused” 5 day time limit can be challenging but “consider that a complaint should not have

reached the deadlock stage … without having been thoroughly investigated by the company”

Time limit workable but only low numbers going thorough at the moment; Would like to see the turnaround time for a response extended to 7-10 days Would like response time to be 10 days

Provides a genuine


than litigation

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CCWater

If case file submitted to WATRS, customers would still need to be clear about what they wanted and were able to prove

WATRS could provide more assistance to customers in completing their application

CEDR

From companies: evidence generally of a high quality and generally better than with comparable schemes

Quality of evidence from customers is often variable both in terms of quality and quantity

Request for further information (as provided for by Scheme Rules) only used once

Evidence gathering in “mass claim” (multiple customers/single application) is difficult particularly trying to ensure that no individual customer is prejudiced by failure to submit relevant supporting evidence

Agree with panel suggestion that it would be helpful if companies set out their obligations (statutory and policy) in relation to the facts of a particular application as an opening paragraph

Provides a genuine


than litigation

CC Water and CEDR feedback

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CCWater feedback on decisions

It is sometimes hard to understand why there are differences in the award levels

Company feedback on decisions

Sometimes difficult to understand why different levels of compensation have been awarded particularly those in relation to non-financial losses including distress and inconvenience

Greater clarity around “succeeds in part” or “does not succeed” needed – how do you differentiate between “tiny things” that could have been done better and “bigger things”?

Greater clarity needed in how an adjudicator makes an assessment of breach of “duty of care” [non-financial loss] applications

Value of awards should be linked in some way to the value of the bill the customer pays to get better perspective

Companies have already acknowledged that the Scheme Rules should be amended to specifically allow adjudicators the power to make awards for non-financial losses such as distress and inconvenience (subject to a cap of £2500 within the overall maximum). Amendments to the wording of the Scheme Rules are currently being agreed

Provides a genuine


than litigation

D: Provides reasoned, reasonable and consistent outcomes?

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E: Effective enforcement mechanism

All companies committed to the Scheme

Non-compliance must be reported by company to Ofwat

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Panel’s view

The Scheme is providing a genuine alternative to litigation but the Panel has identified 2 issues which could make the Scheme more effective in this respect which we will be looking at further before the next review:

Interest payments

Guidelines on levels of awards for non-financial loss

Further details regarding non-financial loss are set out in the Appendix.

Provides a genuine


than litigation

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different groups of


outcome



understood

Provides a genuine


than litigation

Is cost effective

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Is cost effective

For companies?

No additional costs have been incurred outside the costs specified within the contract

Claim amount Sending form to court centre

Using Money Claim Online*

Up to £300 £35 £25

£300 - £500 £50 £35

£500 - £1,000 £70 £60

£1,000 - £1,500 £80 £70

£1,500 - £3,000 £115 £105

£3,000 - £5,000 £205 £185

£5,000 - £10,000 £455 £410

£10,000 -£100,000

5% of the value of the claim

4.5% of the value of the claim

For customers?

Yes, free for customers to use – current County Court fees for money claims are set below

Source:https://www.gov.uk/make-court-claim-for-money/court-fees

The panel will review cost effectiveness within the 12 month review

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Panel’s view

It has been too early to evaluate the Scheme against this criterion but the Panel will do so in its next review.

Is cost effective

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APPENDIX

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Process timeline - complaint to compliance

Company - stage 1 & 2 complaints procedure: if unable to resolve customer complaint

CCWater - mediation and/or investigation: if unable to resolve customer complaint - WATRS referral number issued on request

WATRS process:applicationresponse:decision:compliance:

12 weeks

4 weeks

2 days to challenge eligibility/5 days to respond or settle

20 days

20 days

8 weeks

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Who’s who?

WATRS: is operated by the Centre for Effective Dispute Resolution (CEDR) which deals with over 12,000 consumer disputes every year. CEDR is a leading consumer dispute resolution provider in the UK and operates Ofcom approved adjudication schemes for the communications industry (CISAS) and the postal industry (POSTRS). In addition to these services CEDR also provides schemes for a number of industries including construction, funeral services, renewable energy and ABTA

CCWater (Consumer Council for Water):is the independent representative of household and business water consumers in England and Wales

Ofwat (Water Services Regulation Authority): independent economic regulator of the water sector in England and Wales

DJS Research Limited: market research company conducting customer satisfaction and experience research on behalf of the Panel

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In all decisions made to date, where an award has been made to a customer, there has been a finding that the company concerned failed to meet the “standards reasonably expected” of a water company and an amount of compensation has been awarded for the distress and inconvenience that failure caused

WATRS has made awards for non-financial loss of between £50- £2000

Companies and CCWater have queried the rationale for the different sums awarded

Customer expectations may be higher given maximum limit of £10,000

In law there is no general duty to meet “standards reasonably expected” (a so called “duty of care”) nor is there a specific right for compensation for distress or inconvenience

This problem is not unique to WATRS

Other ADR schemes deal with this by expressly allowing the adjudicator to make a specific award for inconvenience within an overall limit e.g. The Pensions Ombudsman Service published guidance in June 2015 on compensation to be awarded for inconvenience and distress

Companies have already acknowledged that the Scheme Rules should be amended to specifically allow adjudicators the power to make awards for non-financial losses such as distress and inconvenience (subject to a cap of £2500 within the overall maximum)

Amendments to the wording of the Scheme Rules are currently being agreed

Provides a genuine


than litigation

Non-financial losses: distress and inconvenience

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The Panel canvassed opinions from CCWater, CEDR and the companies regarding the possibility of adopting some form of matrix or guidelines in relation to awards for non-financial losses

Along the lines of the approach used by organisations like the Financial Ombudsman Service which gives examples of non-financial awards in the following ranges: non-monetary, moderate (less than £500), substantial (£500-£2000), severe (£2000-£5000) and extreme (£5,000 or more). In respect of the latter category, the examples given involved “irreversible changes” to customers’ personal and professional lives.

Provides a genuine


than litigation

Should there be guidelines on levels of awards ?

CC Water• Including a likely

outcomes matrix along with case studies might be useful

Companies• there is a risk around

using a matrix as it may set expectations but working examples might be useful

CEDR• aware that matrices

are used in other schemes but there is the question of who sets the levels and why

watrs independent oversight panel 6 month review 1 april – 30 september 2015 1

Documents

schemethe panel

impartiality end

watrs decisions

scheme principles2context

scheme specification

customer friendly end

adr schemes end

appropriate use of panel