The Housing Ombudsman’s special investigation report into a housing association merger has found a “lack of ownership within the landlord’s complaint-handling culture”.

The report says Southern Housing’s approach during the merger did not “extend sufficiently to complaints handling and achieving a positive complaint handling culture”.

In the report, the ombudsman has issued determinations on 77 cases, making 184 findings with a maladministration rate of 79%. Regarding complaint handling, the maladministration rate was 92%. The report covers events occurring between October 2018 and September 2023, with 14 complaints involving events post-merger.

Amongst these cases was such lengthy delays in dealing with a leaking waste pipe that Environmental Health issued an improvement notice, as well as a lack of appropriate action following a risk assessment that was made after a resident was wielding a machete and threatening to set fire to the building.

The ombudsman made 300 orders to make things right for residents.

According to the ombudsman, it is clear that Southern Housing identified that complaints and the associated issues were a risk pre-merger, with it evident that one of the landlords was struggling with a huge backlog in repairs complaints, but the new entity did not act sufficiently or swiftly enough to mitigate this.

Richard Blakeway, Housing Ombudsman, said: “The leadership of the landlord has been open and reflective during our investigation, and the proactive steps it is taking should make a difference for residents in what is a challenging operating environment.

“The pressures on the sector means it is highly likely that more mergers will happen. This report exposes the challenges mergers can present to service areas and effective complaint handling. It therefore provides vital learning for the sector as well as the landlord itself.

“The lack of ownership within the complaint-handling culture of the landlord is the common thread across our findings. Integrating policy, processes and personnel can take time, and it is challenging to maintain effective service provision, including complaint handling, while experiencing the organisational pressures and uncertainty that a merger brings.

“Generally, it is much more likely to succeed and embed if it is supported at the highest level of an organisation with a clear plan and vision for complete integration. However, the landlord’s vision for the merger did not extend sufficiently to complaints handling and achieving a positive complaint handling culture across the new organisation.

“Mergers do not immediately solve problems with service provision or any problems with organisational culture unless consumer focus is also part of the merger process. Our Spotlight on knowledge and information management found that where merging landlords already had existing shortfalls, such as those the landlord identified pre-merger, there is a significant risk of those problems remaining unresolved, getting lost, or becoming even bigger.

“These issues are often evident in complaints and impede an effective response to them as well as steps to prevent future complaints. This can also undermine any strengths in complaint handling which the organizations are bringing to the merger, as happened here, resulting in a missed opportunity to build on them.

“I would recommend that landlords who are exploring a merger, or have recently been through one, understand and test themselves against our recommendations to identify any changes they could implement to prevent complaints.”

In a statement, Southern Housing said:“We’re truly sorry to all residents who’ve experienced service failures, including the 67 residents that this report shows we let down. Throughout this investigation process, we’ve worked proactively and collaboratively with the ombudsman and his team, and we welcome the learning from this report.

“76 of the 77 determinations reviewed in this investigation pre-date our merger in December 2022. The ombudsman’s 2022-23 data shows that at merger, Optivo had a maladministration rate of 3.5 per 10,000 homes. This was less than a third of the London average of 11.5, and just over half the national average of 6.8. Whilst SHG had a higher-than-average rate of 13.1, the combined rate for the two organisations was a third lower than the London average.

“We endorse the ombudsman’s call for a long-term plan for housing in their ‘Relationship of Equals’ Spotlight Report – and their recognition that parts of the sector are “at breaking point”. The social landlord cost model was never designed to eliminate service failures. There’s little chance of this changing given unprecedented financial pressures on the sector. The important thing is that we acknowledge failures promptly, apologise, put things right, and learn lessons.

“Since the merger we’ve introduced a number of changes, including a customer service training programme for all colleagues and we’re introducing improvements in repairs and maintenance. We’ll complete the integration of our systems by April 2025 enabling us to realise further merger benefits and deliver services to a consistently higher standard.

“We’ll use the report together with our long-standing commitment to resident governance to drive further improvements. We’re unique amongst large landlords in having four resident places on our board. In addition, more than 100 residents are involved in our resident governance and scrutiny structure and many more participate informally. This has made a huge difference to how we operate including changing the way we manage damp and mould. We’re confident that our commitment to listening to residents and cocreating service improvements will enable us to achieve the standard of services residents tell us they want.”