Social Housing Regulator Downgrades RP’s Governance Rating

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The Symphony Housing Group earlier this year reported concerns relating to its procedures for fire risk assessments. Following an investigation, the Homes and Communities Agency (the Social Housing Regulator) has found that the RP has not met the governance requirements and has downgraded its governance rating from G1 to G3.

Symphony Housing is a non-charitable Registered Society and works within the north west of England through 27 local authorities. Its business mainly revolves around the maintenance, management and improvement of social and affordable homes for rent. It also deals with issues linked to improving social, economic and environmental problems that evolve in its housing communities.

As a result of its engagement with the RP, the Social Housing Regulator found that the RP has “significant weaknesses in the data that it held about its housing stock and that it does not have a robust system in place at group level to understand and manage its assets”. Further that the RP is unable to provide robust assurance to its board or the regulator that it is compliant with the statutory and tenant health and safety requirements across all the properties it owns and that tenants have not been put at risk.

The Social Housing Regulator also found that “there had not been effective scrutiny or challenge of the information provided by subsidiaries to the group” and that the performance reporting framework did not effectively support the group or its board in holding the subsidiaries to account or delivering compliance. Further that the group board did not challenge the executive effectively to obtain adequate assurance and that the internal controls and risk management was ineffective.

Despite Symphony being subjected to such scrutiny of its governance compliance, it has nevertheless remained open and transparent within all aspects of the matter with the regulator. As Bronwen Rapley, Chief Executive of Symphony, has stated, “we are disappointed that we have been downgraded, but we accept the judgement and, having recognised and reported the issue ourselves, we are already working on improvement plans to bring Symphony back to compliance with the standard.” Symphony’s action plans will aim to highlight any immediate risks to tenants, as well as focus on non-compliant areas within its data, systems and governance internal controls.

Whilst this decision is important for Symphony to improve its processes so that it can restore its governance rating in the future, it also delivers an important message to all RPs.

By self-referring Symphony was actively engaging in the co-regulatory approach as required by the regulatory framework and as the Social Housing Regulator expects. The result of a downgrade from G1 to G3 may seem harsh but one needs to view this in light of the governance requirements and the weaknesses found being particularly serious.

Further the decision focuses on the importance of having effective and robust systems in place, as well as an effective board so that each RP operates an effective risk management and has internal controls assurance. In the field of health and safety this is especially important as failings may lead to the health and safety of tenants and staff being jeopardised.

This also feeds into the performance of the board as this information is key to ensure accountability. According to the regulatory framework, company law and/or charity law, board members have specific duties to fulfil and so must take an active role in the governance of an RP. In particular, the board is required to ensure that it effectively challenges the executive to obtain the adequate assurances that internal controls and risk management is effective. In a group structure with a number of subsidiaries, this is especially important. As a result of this decision RP should carefully review their arrangements and seek advice early on to ensure that their processes comply with the regulatory framework. Failing to do this may require a self-referral to the Social Housing Regulator and may lead to downgrades.

Forbes Solicitors regularly advice and assist RPs with a range of governance matters including reviewing policies and processes, providing training to members of staff and board, as well as assisting board in fulfilling their legal obligations. If you have any concerns as a result of this decision or would like general governance advice, please contact Daniel Milnes.

 

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