Five Years On – The Legacy of Cosmopolitan  

Posted: 28th February 2021

A lot has changed since 2012, when Altair wrote our report on the ‘Lessons Learned’ from the near collapse of Cosmopolitan. Improvements have been made, with most of the recommendations from our report now fully implemented. However, there is a serious risk that these improvements will not keep up with the increasing complexity of the sector.

In the last five years in England:

  • Housing association gearing has risen by 50%
  • Sales activity is up by 300%
  • Diversification has intensified
  • The surplus reported on non-social housing activities was £172m in 2015, which is a large increase on the £117m reported in 2014.

Further pressure to increase supply and constraints on income through rent reductions and welfare reform are seen as risks by both housing associations and the regulator. With Brexit causing market uncertainty, and some commentators predicting another economic downturn, boards and the regulator need to be focused on potential problems.

The majority of housing association boards are reacting positively to this challenging operating environment. Governance improvements in the sector are clear to anyone working with boards. Group structures are becoming more streamlined, with more efficient reporting lines. Boards are more strategic and engaged, and board members have much higher expectations placed on them than five or ten years ago. Some boards used to rely on just one member with a finance background; now it is expected that all board members understand the finances and risks.

The sector’s governance is evolving positively, but the pace of change has meant some have been left behind, as problems at Luminus have shown. The key to avoiding another housing association failure is the early identification of those who are not keeping up with this trend of better governance, and supporting their improvement before the organisations’ finances are put at risk.

There is no doubt that Cosmopolitan has strongly influenced the way the regulator works – with a sharp focus on governance and viability. The recommendations in the Altair report aimed at the regulator and DCLG have led to changes in regulation, and have influenced parts of the Housing and Planning Act 2016: measures such as the use of a special administration regime, and the appointment of board members and managers if there has been a legal breach.

Other areas of change for the regulator in the past few years include an investment in skills to gain a better understanding of housing associations’ financial capacity and funding mechanisms; a focus on stress-testing and scenario planning; assets and liabilities registers becoming standard; in-depth assessments serving to identify failing organisations and, in some cases, those that do not grasp the principle of co-regulation. The list goes on.

New consultations on aspects of the standard continue. The focus on health and safety in light of the Grenfell tragedy, the full impact of welfare reform, and other changes on the horizon add to the on-going challenges. The changing face of the sector with its additional complexities means that the regulator needs to keep abreast (and, some say, in front) of these changes, and have the right tools to provide appropriate regulation. The introduction of fees should enable them to act with greater independence, but equally will open them to even more interest in their judgements and actions.

In this environment, the current scope of the regulator’s powers will also come under scrutiny.  This, in practice, may restrict it to being a reactive rather than proactive body, empowered to manage failing organisations rather than tackle the causes of failure – a trend reinforced by recent deregulatory measures. The HCA’s objectives stipulate that the regulator must take the least intrusive action possible at all times; this makes direct intervention difficult to justify and impedes the regulator’s ability to intervene significantly.

The long-term impact of the deregulatory measures introduced in the Housing and Planning Act 2016 remains to be seen. While we believe that the additional freedom conferred upon housing providers is good news for governance, deregulation brings with it an extra burden of expectation and responsibility on boards that should not be underestimated.


Fiona is Co-Executive of Altair, part of the Aquila group.

She can be contacted on 07788 643092 or

This article first appeared at the end of 2017 in 24 Housing

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