Welcoming proactive consumer regulation

Posted: 2nd April 2024 Anne-Marie Bancroft, Head of Consumer Regulation

As of 1st of April 2024 we see the first day of the Regulator of Social Housing’s proactive consumer regulation regime. This comes a long wait after the social housing white paper and the Social Housing (Regulation) Act being granted Royal Assent in July 2023.

The proactive regulation regime is one of the main components of government’s legislative and regulatory response to the Grenfell Tower tragedy. It sits alongside the new Building Safety Regulator and enhanced powers granted to the Housing Ombudsman Service, which also comes into effect as of 1st April 2024.

What does this mean?

Cabinets, Lead Members and Boards now have more to get their heads around to ensure that they comply with the multifaceted expectations of the different bodies. Our advice is always to consider how any activity can satisfy the broad range of regulatory requirements.

The Regulator of Social Housing (RSH) has set three key tests for the implementation of the proactive regulatory regime:

  1. Regulation should make a meaningful difference to tenants,
  2. Be deliverable by organisations, and
  3. Be ‘regulatable’ by the RSH.

I challenge those looking to meet the expectations of the consumer standards to assess their activity similarly. Does your effort make a meaningful difference to tenants? Can you deliver it? Can you evidence the outcomes of your activity to the RSH?

Programmed and reactive inspections

1st April also marks the end of in-depth assessments, previously the tool for engaging on a routine basis with private registered providers. This has been replaced by ‘programmed inspections’.

Inspections now include a mixed team, incorporating a consumer expert and potential engagement with groups of tenants during the process. We know that the RSH deployed various tenant engagement techniques for inspections during the pilot programme, meaning it is difficult to predict exact approaches from now on. However, we can anticipate that we will see tailored approaches.

There will be consumer gradings which will run from 1 to 4, akin to governance and financial viability gradings for private registered providers. The RSH has been quite forthcoming in that they do not expect to be issuing C1 gradings in the near future. There is also an expectation of an action plan to be in place for all C2-4 gradings. I think we are looking at a sector-wide effort to change things; ships and Suez Canals come to mind.

For private registered providers a new question is posed on the position of G (governance) gradings in the context of consumer gradings. We know that in the reactive consumer regulatory environment, serious non-compliance with consumer standards usually results in a downgrade in the governance grading. We can speculate that a poor consumer grading might mean a governance downgrade. Only time will tell, and we will know more when we see the landing of consumer gradings this summer.

In addition to the change to programmed inspections, we see a clarity on the threshold that a landlord will need to self-refer to the RSH on consumer matters. Landlords now must communicate with the regulator in a timely manner on all material issues that relate to non-compliance or potential non-compliance of the consumer standards. This means that it is likely we see a large wave of self-referrals in early 2024/25. Cabinets, Lead Members and Boards should consider how they interpret and apply the threshold for self-referral and how they engage with the RSH accordingly.

The complexities of engaging with local authorities

Although the RSH does not assess the governance of local authorities it is important that there is an understanding of the context for the delivery of local authority landlord services. Local authority governance is incredibly complex in comparison to housing association peers, delegations from Cabinet into the landlord service differ from authority to authority meaning that fully understanding the governance of each authority will certainly play a key foundation for programmed inspections.

In assessing the delivery of the Transparency, Influence and Accountability Standard the RSH has an additional complexity at hand. In serving constituents, local authority Cabinets have another, and arguably higher priority stakeholder. In attempting to meet the Transparency, Influence and Accountability Standard, local authorities have a huge challenge in showing how tenants have influenced decision-making, considering other stakeholders.

A missing piece of the toolkit

Until summer, the RSH also misses a key tool in its toolkit by way of a full sector picture of Tenant Satisfaction Measures (TSMs). Inspections in the first and second quarter of 2024 will lack a benchmarking and peer comparison on satisfaction and management information. Furthermore, when the sector wide TSMs are published and likely compared widely, I ponder how they will align with the consumer gradings; will we see high levels of satisfaction and low consumer gradings and vice versa.

What to expect next?

Over the next week or so, we should see increased engagement between landlords and the RSH in response to the changed self-referral thresholds. We will also see the first wave of inspections for all social landlords this quarter with publication of gradings in the ‘summer’. It will be a long time until this environment feels anything like business as usual and organisations across the sector are all in different places with understanding the requirements, knowing their current position, and meeting expectations. Nonetheless, we know that proactive regulation is here, the expectations are set out and that landlords are expected to get on with things.

 

At Altair, we are committed to assisting our clients in adapting to the new regulatory environment. If you would like to discuss how these changes may impact you and your organisation, please reach out to:

Anne-Marie Bancroft, Head of Consumer Regulation

anne-marie.bancroft@altairltd.co.uk

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