Two governance upgrades and one downgrade in latest Regulator judgements | News

The Residents' Network Strip

The Residents' Network

Two governance upgrades and one downgrade in latest Regulator judgements

The Regulator of Social Housing has released its latest regulatory judgements, with two associations achieving a governance upgrade, one being downgraded and one remaining G1/V1.

The good news came for GreenSquare and Livv Housing Group who had governance upgrades of G2 to G1 and G3 to G2 respectively. 

GreenSquare were praised by the Regulator for being proactive and changing the nature of the board.

The Regulator said: "GreenSquare has enhanced the skills mix of its board and improved the quality of board reporting. This has facilitated improved oversight of health and safety compliance.

"It has also implemented recommendations from an independent review of governance, revising its risk management framework and strengthening its approach to managing and monitoring risks.

"Since the last regulatory judgement, GreenSquare has communicated material issues with the regulator in a proactive and timely way, which has led to greater transparency and improved co-regulation."

Welcoming the new judgement, GreenSquare's chief executive Ruth Cooke says: "We absolutely accepted the need for change that the previous regulatory judgement highlighted last year. Even before it was published, we had been focused on doing all that was necessary to ensure full legal compliance and, critically, the health and safety of our customers and colleagues.

"This new assessment by the regulator is testament to the efforts of all those involved in ensuring the successful delivery of the far-reaching improvement plan that we agreed with the regulator last year."

Another positive upgrade was for Livv Housing Group, who were downgraded to G4 a couple of years ago and have undertaken major work as a result. They have now moved to G2 and "simplified its governance and organisational structure".

The Regulator also praises the association for other changes, adding: "LHG has also implemented a new risk management framework to improve assurance that key risks are managed effectively. This includes new policies and procedures relating to statutory health and safety compliance, improved stock data and enhanced board reporting, through which it demonstrates statutory health and safety compliance.

"LHG has strengthened its governance arrangements through a refresh of its board and executive team; this has enabled more effective scrutiny and challenge of performance and risk reporting.

"Whilst the quality of reports has improved there remain further opportunities to enhance board reporting, recording of meetings and co-ordination of support to the Board."

Léann Hearn, Chief Executive at LHG, said: "Trust. Safety. Data. These three words are hugely powerful and have underpinned two years of change to get to G2 and to define a Livv that’s both for, and of, the future.

"We’ve left no stone unturned to get to the strongest data and processes possible and with a change to a regulated parent, we’ve put our purpose back at the core of the business, a housing provider that focuses on positive impact and flourishing communities."

However, it was not all positive news, with Incommunities Group (IGL) receiving a governance downgrade.

The Regulator said that "we have concluded that IGL needs to strengthen its risk management and control framework to ensure that it is managing key risks with an appropriate degree of effectiveness."

On the judgement, it added: "IGL self-reported that it had not implemented rule changes correctly, for two of its subsidiaries, in April 2018. The error was discovered in May 2020 when the provider was carrying out work relating to further governance changes and accounts approval processes.

"During the intervening two-year period it refinanced and issued a bond and as a result these two subsidiaries made incorrect certifications about their rules to lenders. IGL’s internal controls did not ensure that the new rules were implemented correctly or identify that it had not registered them with the Financial Conduct Authority.

"Since May 2020, IGL has worked with funders and lawyers to rectify the situation but the reliance on incorrect rules left IGL reliant on the goodwill of the group’s funders. IGL and the two subsidiaries had to ratify decisions made between April 2018 and May 2020, including in respect of its funding arrangements.

"IGL has commenced work to strengthen its internal control framework and is keeping the regulator informed of its progress."

Other judgements were for ForHousing, which the Regulator notes it is happy with but needs to "improve some aspects of its governance arrangements to support continued compliance."

The judgement adds: "ForHousing is taking further steps to strengthen internal controls and to improve the independence of its decision making. The group has appointed independent advisors to consider its current organisational structure and assess the extent to which it facilitates ForHousing’s delivery of its strategic objectives.

"The work of the independent advisors will include undertaking a full governance review to ensure that the ForHousing board has the right skills and experience to manage its risks.

"The ForHousing board has confirmed its intention to work with the regulator and to develop an action plan which reflects both the recommendations stemming from the review work and any other actions necessary to strengthen compliance. Further independent review will be required to provide the ForHousing board with assurance on the effectiveness of its actions and on its approach to transparency."

Sitting top of the class was Flagship Housing Group, who were awarded a G1/V1 rating, with no changes from the previous judgement.