It’s good to talk – great to listen. The next steps after the HCA’s Protecting Social Housing Assets discussion paper
We are smiling in the Altair offices. In June we reviewed the discussion paper on Protecting Social Housing Assets and some of the responses to the discussion paper. We published our thoughts and it looks like the regulator was listening.
Firstly, we took the view that the framework for regulation must recognise the complexity and diversity of organisations within that framework and take a proportionate approach to the regulation of risk. You could not have a one-size fits all approach. The regulator has accepted that. Secondly, the regulator needed the staff and resources to understand what a proportionate approach meant in practice – making sophisticated judgements about sophisticated organisations. It’s good to see that the regulator was given permission to appoint a permanent Head of Regulation and a restructured team below them. The recent appointments suggest that the HCA now has a good blend of external talent and internal experience.
There was, though in our view, a third element to a successful co-regulatory framework and that continues to be the board role. To be truly effective the regulator indicated that we needed ‘a step change’ in the approach of boards; given recent experience that has to be right.
If we have a worry in the office, it’s that the focus on dropping ring-fencing plans means that the sector, and individual boards, miss the important messages about managing risk, scrutinising and challenging business plans, and ensuring adequate assurance. Good boards are currently organising governance health checks, to make sure that their governance arrangements are still fit for purpose. The best organisations, which may be embarking on growth and diversification, are making sure that their checks and balances are adequate, and that their line of sight and understanding on risk within their business is razor sharp. Even organisations who are running a steady-as-she-goes organisation need to make sure that this doesn’t mean you overlook some of the external changes that will have a massive impact on business viability.
All of this is good and encouraging. However, there are enough associations who are not taking such an approach for the regulator still to have cause for worry.
The regulator has responded to the challenge of playing its part in producing an effective co-regulatory regime that recognises both where responsibility for good governance lies and the independence of the sector. It is now for boards to play their part and respond accordingly. We, as always, are happy to assist.
Steve Douglas and Fiona Underwood are Altair partners, strategy and governance experts. Steve can be contacted on 07810-152840 and email@example.com Fiona can be contacted on 07788 643092 and firstname.lastname@example.org