Company Secretary Snapshot - July 2024

Welcome to July’s snapshot! This month we have a bumper edition, looking at the outcomes from the first inspections by the Regulator of Social Housing (RSH) into compliance with the new consumer standards, a new code of governance for for-profit registered providers of social housing (FPRPs), key themes from the National Housing Federation (NHF)’s Governance Conference, an update from the RSH and the Housing Ombudsman (HO) about their relationship and more. Enjoy!

RSH publishes Annual Review of Consumer Regulation

The RSH has published its annual review of consumer regulation work for the year 1 April 2023 to 31 March 2024. The annual consumer regulation review explains how the RSH has gone about implementing the legislation on consumer regulation and includes case studies and lessons learned. The report provides learnings that registered providers of social housing (RPs) can use to strengthen their approach to delivering the outcomes required by the RSH’s consumer standards.

The RSH has identified a number of key themes in the report for RPs to be aware of. The RSH notes that while the consumer standards have changed since the period that the report covers, RPs should take account of these themes as part of their ongoing work to meet the required outcomes of the new consumer standards. The themes highlighted by the RSH state that RPs must:

• meet all health and safety requirements to keep tenants safe
• know the condition of the homes they manage
• handle complaints effectively
• engage effectively with tenants 
• meet the requirements of the new consumer standards

The RSH has also confirmed that when an RP identifies an issue that impacts its delivery of the outcomes of our standards, the RSH expects RPs to be open and transparent by making a self-referral at the earliest opportunity. The message for RPs is not to wait until the RSH intervenes – refer the issues as soon as you identify them.

See below for our analysis of the RSH’s first reported consumer gradings. 

Code of Governance for For-Profit Registered Providers

The British Property Federation (BPF) has published a Code of Governance (Code) for FPRPs.
 
The Code establishes a set of standards which embody and aim to promote good governance practice in the FPRP sector. The Code is divided into seven themes as follows: 

1. Leadership and strategy
2. Culture and values
3. Board composition and effectiveness 
4. Board roles and functions
5. Delegation of delivery
6. Integrity and probity
7. Audit and risk

Under each theme is a set of principles, amplified by more detailed expectations. The Code is voluntary and will operate on a “comply or explain” basis – i.e. those FPRPs adopting the Code should comply with the expectations or provide a reasoned explanation of why they have chosen to adopt alternative arrangements. 

The Code recognises that the FPRP sector comprises organisations with a diverse range of characteristics, and there is no single blueprint for an FPRP. The Code is therefore designed to be adopted by a range of types and size of FPRP, and with an acknowledgement that some expectations may reasonably be applied more flexibly by small providers.

All RPs are required to sign up to a code of governance by the RSH. The publication of this code does close somewhat of a gap for FPRPs, acknowledging that aspects of the NHF Code of Governance 2020 may not be applicable, although the UK Corporate Governance Code may be more familiar to investors. Note that the RSH does not endorse any specific codes of governance. 

Regulator of Social Housing and Housing Ombudsman publish memorandum of understanding

The RSH and the HO have published their updated Memorandum of Understanding (MoU) setting out how they will continue to work together. The MoU reflects the fact that the role of both agencies, and their relationship with each other, has evolved since the enactment of the Social Housing (Regulation) Act 2023.

The updated MoU sets out a new framework of communication, cooperation and exchange of information between the RSH and the HO, and explains how each will work together to deliver their respective roles. The RSH’s focus is at landlord level, setting standards that RPs must deliver against. The HO decides on individual disputes between residents and RPs and also sets complaint-handling requirements.
The MoU includes commitments for:

• Co-operation and communication: both bodies will strive to achieve a complementary and compatible approach. They will engage in early-stage communication on issues with potentially significant implications for each other. Enquirers will be directed to the appropriate organisation, with clear explanations provided.
• Information sharing: the RSH and HO will share current information and data on RPs to inform their respective activities where appropriate. This will include intelligence on emerging sector risks, advance notice on publications such as the HO’s publication of severe maladministration of the RSH’s regulatory judgements.

Fiona MacGregor, Chief Executive at RSH, said the two bodies will “look to deliver our new roles in a proportionate way to ensure landlords deliver sustainable improvements where those are needed for the benefit of tenants.” It will be interesting to see how this develops over time as the new remits of the RSH and HO settle.

Financial Conduct Authority publishes annual breakdown of registration function

The Mutuals Division of the Financial Conduct Authority (FCA) (the registrar for community benefit societies) has recently published an update on its work. Some of its key updates include:

• More users are now using the online portal to submit applications and returns. Last year, the FCA also added a mechanism to allow societies to demonstrate their registration status to third parties (e.g. suppliers) automatically via the online portal.
• The FCA is working with the Law Commission in relation to the review of the Co-operative and Community Benefit Societies Act 2014. A consultation paper is expected to be published this summer. The Law Commission has been asked to review the Act, to ensure that it is fitting to the nature and needs of co-operatives and community benefit societies, and to ensure that their the regulation is proportionate and effective. 
• Since introducing its process to allow people to report a concern about a society to the FCA, it has received 84 reports relating to 67 societies.
• The websites of 3,200 societies have been reviewed to check how these societies are referring to their registration status with the FCA. Checks have included whether the society is displaying their name correctly and whether the society refers to itself as being “regulated” or “authorised” by the FCA rather than “registered”.

Societies are advised to consider the FCA’s review to understand if there are any internal processes that should be reviewed (e.g. checking your website information, increasing use of the FCA’s portal).

Takeaways from NHF Governance Conference 2024

We recently attended the NHF’s Governance Conference 2024, which took place on 19 June 2024. Topics covered this year included governance structures, equality, diversity and inclusion, the Better Social Housing review, the impact of the general election on governance and resident engagement. Some of our key takeaways include:

• Consumer Grades: C1 grading is not absolute in terms of compliance – it allows some degree of flexibility. Issues can still arise in C1 organisations, but they need to demonstrate learning from mistakes. The RSH is seeking a cultural shift, which takes time. Initially, there may not be many C1 ratings as result. Governance (G) and compliance (C) grades are related; issues in C grades can affect G grades but not always. Governance Structures: Governance requires granular detail. Boards need to grapple with three principles: 
  1.    There is no absolute right or wrong answer – boards should focus on the outcomes rather than the checkboxes
  2.    Boards need to hear diverse voices
  3.    Establishing and monitoring a strong organisational culture is key.
• Tenant engagements and TSMs: Boards must understand both formal (e.g. complaints data) and informal (e.g. social media, events) tenant feedback, to see the bigger picture and ensure appropriate granularity. Reporting on tenant impact remains challenging and is something which continues to evolve. Boards need to provide evidence of resident influence in decision-making.
• Better Social Housing Review: Organisations should be undertaking annual reviews against the outcomes described in the Better Social Housing Review and update actions regularly – don’t let this drift. 
• Data quality: NHF are developing a ‘gold standard’ for stock condition surveys as well as developing best practice guidelines. Good data governance is vital. The NHF will make recommendations in relation to data categories but these will need be tailored for organisations based on their own priorities. 
• Resident engagement: Themes identified as being key to perfecting resident engagement include: trust (e.g. how is feedback used), inclusivity (e.g. digital literacy) and courage (e.g. moving away from setting agendas for discussions to ensure RPs can remain open and learn from the process). It was also suggested that RPs should not make too many assumptions about how to engage with customer groups e.g. feedback from younger customers is that they won’t follow their landlord on social media.

Consultation: Institute of Directors publishes consultation paper on new code of conduct for directors

The Institute of Directors (IoD) has published a consultation paper on a new code of conduct for directors.

The code, which applies to directors of organisations of all sizes in the private, public and not-for-profit sectors, has been developed to help directors make better decisions and to promote high levels of integrity on the part of directors. It represents a voluntary commitment and is not intended to hold back directors or create a new burden of compliance.

The code is structured around the following six principles of director conduct, each of which is underpinned by a number of specific undertakings:

• Leading by example. Demonstrating exemplary standards of behaviour in personal conduct and decision-making.
• Integrity. Acting with honesty, adhering to strong ethical values, and doing the right thing.
• Transparency. Communicating, acting and making decisions openly, honestly and clearly.
• Accountability. Taking personal responsibility for actions and their consequences.
• Fairness. Treating people equitably, without discrimination or bias.
• Responsible business. Integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts.

The IoD is seeking views on:

• Whether there are any additional issues that should be addressed in the code.
• How awareness of the code can be encouraged among directors and the wider public.
• Whether directors should make a public declaration or disclosure of their adoption of the code.
• Whether there is a role for government, regulators or professional bodies in encouraging adoption of the code.
• Whether existing directors would be willing to commit to the principles and undertakings in the code.

The deadline for responding is 16 August 2024.

Regulatory grades

The RSH has published its first consumer gradings (or C-Grades). We’ll be reporting on any key themes here as the sector begins to take stock of how their grades stack up.

Failure to meet consumer grade resulting from:

• Safety and Quality Standard failure including
  
  • Over 50% of domestic properties unable to evidence a current electrical safety certificate and 
  • 2,700 homes without a current electrical condition report or with unsatisfactory certificates
  • Unable to confirm the level of risk from the outstanding electrical remedial actions
  • Failing to demonstrate that the regulations for smoke and monoxide alarms were complied with in 85% of homes
  • Failing to confirm whether smoke and carbon monoxide detectors are installed as legally required
  • Over 1,200 overdue fire safety remedial actions of medium or high priority)
  • Failing to hold complete and accurate records 
  • No valid communal asbestos surveys for all blocks
  • No consistent process for re-inspecting asbestos in communal areas
  • 3,000 fire remedial actions outstanding
  • Low confidence in the accuracy of condition of housing stock
  • Lack of accurate data about quality of homes
  • Hundreds of open damp and mould cases (Dozens of which were more than 12 months old)
  • 16,000 outstanding repairs (over half of which were more than 12 months old).
  • Over 10,000 outstanding work in progress repairs
  • Most repairs being completed outside of agreed timescales
•     Rent Standard failure resulting from:
  • Failure to apply the 1% rent reduction required under the Welfare Reform and Work Act 2016, between 2016/17 and 2019/20 on about 300 affordable rent properties
  • A rent policy put in place since 2004 that de-pooled service charges for gas and lift maintenance erroneously from rents with the result that a significant number of tenants have been overcharged in the subsequent years
• Transparency, Influence and Accountability Standard failures resulting from:
  • Not collecting any data for tenant satisfaction measures (TSMs) in the 2023/34 period without a reason.

The above gradings were applied as a result of reactive regulatory engagement rather than scheduled inspections. For further information in relation to the above gradings, see our recent article here.

C1 gradings resulting from:

• Evidence-based assurance that appropriate systems are in place to ensure the health and safety of tenants in their homes and associated communal areas – e.g. following an internal audit external, specialist support was commissioned; delivering improvements in health and safety processes.
• Keeping an accurate record of the condition of homes through physical surveys – e.g. using understanding of the quality and safety of homes to make decisions on future investment 
• Providing an effective repairs service to tenants and taking action to improve the service and outcomes for tenants when issues occur – e.g. identifying issues with repairs and making a proactive change to deliver better outcomes.
• Prioritising the safety and security of communities – e.g. dedicated community safety team, Anti-Social Behaviour (ASB), specific targets on ASB performance, regular reports to board on a range of data.
• Appropriate allocations policy – e.g. evidence of ensuring tenants are supported in sustaining their tenancy.
• Regular review of performance information on complaints handling – providing evidence that it learns from information on complaint types and outcomes and uses this to make improvements.  
• Evidence that feedback from tenants has directly and positively impacted service delivery. 
• Changes to complaints handling which improved consistency and reduced response times.
• Delivering improvements to health and safety as a result of internal audits and external assurance reviews.
• Providing evidence of understanding of the quality and safety of tenants’ homes to make decisions on future investment to maintain and improve homes.
• Identifying issues with repair satisfaction levels and making proactive, tenant focused improvements.
• Board and tenants receive reporting on complaints performance and insight and evidence that performance data is used to improve services. 
• Approach to complaints has been scrutinised by tenants and reviewed independently with improvements made as a result.
• Arrangements in place to seek the views of tenants and to enable them to provide scrutiny
• Acknowledging the need to continue to focus on communication with tenants and to capture the views from a range of tenants, with strategies developed to deliver in these areas.

The above gradings were awarded as a result of the first inspections carried out by the RSH under the new consumer regulation regime. They are the first evidence of what is required to achieve a C1 grading. While it is clear that perfection is not a requirement, evidence of an RP’s engagement with the new regime clearly is. The RSH has made it clear that where RPs can evidence that they are complying with the consumer standards then the gradings should reflect this. We’ll be keeping a close on theses gradings and providing our analysis as the results of further inspections come through.

Upgrade to Governance grading resulting from:

• Changes to leadership and development of board thereby adding organisational capacity and improving the oversight and management of risks. 
• Improvements made to health and safety risks to tenants, safeguarding of tenants, and understanding of the quality of homes. 
• Investment in improving the use and presentation of data on tenants and homes, and in the quality of reporting to the board. The board can make better informed decisions about risks and the future of the organisation. 
• Improvements in board’s approach to carrying out its responsibilities, including how board members proactively challenge the executive team and seek assurance over approach to managing key risks.
• Demonstrating a commitment to transparency and co-regulation.

AOB

CHIC – framework re-appointment
We have successfully been reappointed to the CHIC legal services framework. If you are a member of CHIC and would like to use the rates and benefits associated with this framework, please do let us know.

Join us at forthcoming events
As we head into the autumn, we will be attending an array of national conferences and events.  If you are intending to go to any of the following, please do let us know as it would be lovely to see you:

Housing Community Summit – 9-10 September, Liverpool

Treasury in Housing Conference – 10 October, London
Join Louise Leaver, Catherine Raynsford (Hyde Group) and Jonathan Clarke (Savills) at their breakout session on Equity and housing: can we deliver profit with purpose?

Inside Housing Regulation & Governance Conference – 17 October, London

We’ll be having a summer break during August – see you on the other side!