24 November, 2020
The National Housing Federation (NHF) has this week published a new Code of Governance (the Code); the first in five years.
It is a requirement of all registered providers (RPs) of housing registered with the Regulator of Social Housing (RSH) to adopt a code of governance, with many RPs previously adopting the NHF's 2015 code. The NHF have called on RPs to adopt the new code by 31 March 2021 and for a statement of compliance to be included within their 2021-22 annual reports.
The new Code is a complete reworking of the 2015 version, with the NHF having focused on three key areas during drafting and the consultation stage:
The result is a concise code (down from 40 plus pages to just 16) with just four key principles rather than the previous nine. The principles are:
At the heart of the four principles are five tenets organisational culture; ensuring equality, diversity and inclusion within the RP; environmental and economic sustainability; and accountability of boards to tenants.
The core message from the new code is a requirement for the board of an RP to set and subsequently drive the mission of the organisation and that the board of an RP should not be passive in the decision-making process. Additionally, the board will be obligated to provide assurances to the wider stakeholders in the RP, whether that be the tenants, employees or community in which the RP operates.
The requirement for diversity is entirely new and reflects a change in society since the publication of the 2015 code. The new code prescribes active commitments to achieve targets specific to the RP to ensure this is achieved. This requirement aligns with the RSH's Tenant Involvement and Empowerment Standard and adherence with one would likely ensure compliance with the other, subject to the outcome of the recent White Paper.
The continued viability of the organisation is core to the code. The code seeks to ensure that the board is active and dynamic, and that it ensures that the RP continues to be financially and socially viable. Additionally, the code outlines a requirement boards to actively seek to work with other organisations and to ensure best practice is achieved through seeking collaborations and partnerships with others. Observance of this provision on suitable terms would assist an RP with achieving the RSH's Governance and Financial Viability Standard and Value for Money Standard.
Additionally, there is a core requirement for those with 'lived in experience' to have an influence on decision making at board level. Whether that is through additional representation at board level or active consultation will likely depend on the individual circumstances of the RP, however, the requirement for a statement of compliance to be provided will ensure the process is documented.
Finally, significant organisational change from the 2015 code is the reduced tenure for board members. This has been reduced from 9 years to 6. However, in very specific circumstances it may be possible for a board approve an appointment for 9 years.
The new Code, the RSH's Regulatory Standards, the Housing Ombudsman's new Complaint Handling Code and the recently published White Paper on Social Housing present a broad wave of change for governance and compliance within the housing sector. There are obvious synergies in the requirements and expectations of these documents RPs will need to plan away to satisfy all of them.
Foremost, RPs should remind themselves that the obligations outlined in the Code should be seen as minimum rather than gold standards. Simply 'ticking the boxes' of the Code will not result in compliance with the RSH's Regulatory Standards.
For some RPs there may be a need to consider not just the current composition of its board but also, fundamentally, its governing documents as amendments might be required to ensure that the requirements of the new Code are entrenched particularly the change in away from the well-established convention of the 'nine-year rule'. Additionally, boards will now need start considering how adherence with the Code might be reflected in a statement of compliance.
For more information contact Daniel Milnes in our Housing & Regeneration department via email or phone on 01254 222313. Alternatively send any question through to Forbes Solicitors via our online Contact Form.