In February 2015 the Homes and Communities Agency (HCA) announced that it was introducing significant changes to the regulatory framework for social housing providers. This followed last year’s statutory consultation. The HCA has said the changes “are designed to enable the social housing sector to protect social housing assets, continue to attract private finance and deliver new housing supply.”
The new framework went live on 1 April 2015. Some of the key changes include, but are not limited to:
- The requirement to adopt an assets and liabilities register
- Certifying compliance with the governance and viability standard in annual accounts
- Compulsory stress and scenario testing
- Demonstrating compliance with the standard to register an entity as a Registered Provider (RP)
- Reporting to the regulatory in an accurate and timely fashion
- Comply with all ‘relevant law’
- Ensuring that boards have the correct skills/ capacity to manage risk
Modifications to the regulatory framework have also been accompanied by changes to the NHF Code of Governance, which is reportedly used by the vast majority (87%) of providers.
The changes largely signify a recognition that the sector is increasingly facing a more diverse range of risks than ever before. Risks that need to be effectively managed. This has been evidenced by the recent impact of fluctuations in interest rates on some organisations’ ability to ensure sufficient cash-flows. In a presentation Jonathan Walters (Director of Strategy and Performance at the HCA) recently argued that some housing providers can’t always answer the ‘simple’ questions such as: What is this organisation for? Why are we doing this? What happens if it goes wrong?
Many of these alterations flow from the recommendations that Altair made in its independent report into the near failure of Cosmopolitan, identifying lessons for the sector and regulator. We have therefore worked with several organisations to deliver tailored training and advice on what the changes mean for their operations and what we consider to be best practice approaches to tackling them. For example we provide answers to questions such as, what does a robust and multivariate ‘stress test’ look like in a social housing context? What resources are required to create and maintain an effective assets and liabilities register?
There are no model answers but associations should be considering how to ensure compliance with the framework now. It is worth providers referring to the Code of Practice, which uses examples to illuminate what effective compliance could look like.
In particular, RPs should therefore already have their road map to hand to ensure this ‘’step change’ in regulation brings improvements to their approach to risk management.
For further information contact Lucy Worrall: firstname.lastname@example.org (m) 07880 327 205