Forbes Hosts Forum On New HCA Governance And Viability Standard For Social Housing Providers

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Representatives of housing associations from across the North attended the discussion forum on Asset and Liability Registers hosted by the Housing and Regeneration Team at Forbes Solicitors at their training suite in Preston and featuring a guest presentation by Anna Simpson, the HCA’s Head of Regulatory Framework.

This proved an excellent opportunity to discuss the changes to the Regulatory Framework made by the Homes and Communities Agencies and coming into force on the 1st of April 2015 particularly in relation to the Governance and Financial Viability Standard and the new Code of Practice expanding on it. Registered providers were able to discuss the different elements of the changes and particularly focused on how to compile an asset and liabilities register.

Anna Simpson outlined that the changes were deemed necessary in order to respond to the complexities of the sector where there is on-going diversification and increased risk, and to ensure that the sector continues to remain attractive for private finance. As the Regulator is concerned with protecting social housing assets, Ms. Simpson emphasised that Registered Providers should be thinking laterally about risk assessment and always coming back to the potential impact of ventures on social housing assets whether direct or indirect.

Daniel Milnes, Head of Contracts and Projects explained that the focus on risk assessment in the changes to the Regulatory Framework is to ensure that the difference between managed risk and uncontrollable loss identified by the HCA is understood and implemented. As such the changes require not only an asset and liability register, but also robust stress testing of multivariate scenarios, understanding new liabilities and fostering a constructive and challenging debate within RPs’ decision-making processes.

Lucy Worrall, Head of Housing and Regeneration (Property) emphasised that the requirement of an asset and liability register by the HCA is not a one size fits all approach, so each RP should be designing it according to their circumstances. She also discussed the extent to which Land Registry search results would only represent the title to a property at the time of the search and so would not without review satisfy the requirement of keeping a register updated. Not all property assets appear on the Land Registry’s records (such as leases for less than 7 years) and so RPs will have to check and interpret their own records and retained documents to produce some parts of their asset registers. Lucy also expanded on the types of obluigation affecting properties which should be taken into account in making up the register.

Anna Simpson also reported that some RPs trialling the new Standard had identified assets previously not recognised as having value. Daniel Milnes discussed the sorts of non-property assets that might appear in a register such as intellectual property for the RP’s brand in providing services. With regard to liabilities, the HCA’s position is that these should be considered in the widest context and the discussion explored what this may include such as leases, sale lease and leaseback arrangements, guarantees, cross defaults, unavoidable obligations, bonds, TUPE costs and litigation costs.

One of the key outcomes of the discussion was that to ensure compliance with the revised Standard it is an opportunity for RPs to review and consolidate their various processes and records, which will further contribute to running their organisations effectively.

With the entry into force of the changes just around the corner, the issue of what the HCA expects was also discussed where it was highlighted that within the co-regulatory approach, the HCA will engage with RPs through the periodic In-Depth Assessments and the annual Stability Checks. RPs will be given sufficient notice prior to the In-Depth Assessments during which the HCA is looking at how the RP has engaged with the changed standards and the role its board has had in the process.

While there is no right or wrong answer to meeting the new Standard, one common factor which is evident from the HCA’s new documents and reinforced by Anna Simpson was the crucial role of the RP’s Board in certifying compliance. Daniel Milnes suggested that reporting and approval procedures within RPs should be reviewed to assess whether changes would help the Board deal with its responsibilities under the revised Standard and Code of Practice. Understanding the broad assessment of combined risk management that Boards now had to maintain is vital in considering how to present projects for approval.

The Forum was a valuable opportunity to discuss the progress different RPs are making in getting ready for the new Standard and we thank Anna Simpson for her valuable contribution to the event.

The Forbes Housing and Regeneration team has experience of assisting RP officers and Boards in complying with the Regulatory Framework in assessing specific projects or policies and processes more generally. If we can help with any queries on the new Standard and Code and how best to get ready for their effect please contact Daniel Milnes or Lucy Worrall, call 0800 037 4628 or send us an enquiry via our contact form.

Daniel Milnes

About Daniel Milnes

Dan is a Partner and Head of Contracts & Projects. Dan’s blogs cover the areas in which his specialities lie in commercial, regulatory and governance law which cover a broad range of matters dealing with contracts, projects, corporate and group structures, funding and compliance with a range of legal regimes including data protection. This also involves writing and advising on various forms of commercial contracts including joint ventures, development and construction agreements and intellectual property contracts including IT agreements, sponsorships and other rights licensing arrangements.
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