The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
This quarter the key highlights are:
1. Charity Commission announces changes to the annual return
The changes will apply from the 2015 financial year end and will include three new question areas - money received from the government and grants, policies on staff pay, and the review of financial controls. This announcement follows a full consultation on proposed changes - a summary of the consultation responses can be found here.
The controversial requirement for charities to outline their campaigning expenditure has not been implemented but is still on the agenda for the 2016 changes. We’ll provide an overview of the new rules on political campaigning by charities in our next update in February 2015.
2. Changes to the UK Corporate Governance Code
The UK Corporate Governance code (“the Code”) is one of two main codes used in the social housing sector. In September the FRC (Financial Reporting Council) issued an updated version of the Code. This follows previous consultations on directors' remuneration (October 2013), risk management, internal control and the going concern basis of accounting (November 2013), and going concern, risk management and internal control.
The main amendments include:
the introduction of a ‘viability statement’ for boards to include in the strategic report to investors to provide an improved and broader assessment of long-term solvency and liquidity;
greater emphasis being placed on Boards of listed companies ensuring that executive remuneration is designed to promote the long-term success of the company and demonstrate how this is being achieved more clearly to shareholders; and
the FRC highlighting the importance of the board’s role in establishing the ‘tone from the top’ of the company in terms of its culture and values. The directors should lead by example in order to encourage good behaviours throughout the organisation.
The changes will apply to financial years beginning on or after 1 October 2014.
3. Prosecutions brought for breaching trading disclosure requirements
The Companies Act 2006 contains trading disclosure requirements with which companies must comply (which include, for example, the display of the company name at its registered office). Since 2009, the criminal enforcement team of BIS’s Legal Services Group (which deals with criminal investigation and prosecution of allegations following referral of cases predominantly by Companies House and the Insolvency Service) has brought 5 successful prosecutions for breach of these requirements, with orders for costs of up to £1650. For the full list and further details click here.
Spotlight: Criminal Convictions of Board Members/Trustees
Over the last quarter we have received several queries from clients who have found out that a member of their Board has a criminal conviction that has caused concern to the organisation.
Although individuals with convictions can play an important role on a Board, particularly for organisations working with the criminal justice system, convictions for some offences (such as sexual offences involving children or images of such) are a big concern to our housing and community group clients, both from a safeguarding perspective and in terms of potential reputational damage to their organisation.
Recruitment processes are the most obvious place for obtaining information at the outset - the easiest way to find out if a prospective Board member has a criminal conviction is to ask them at recruitment stage. In the most recent scenarios that we are aware of, the individual has come forward and volunteered the information themselves but the timing at which this information was volunteered (perhaps because they have already been in contact with the organisation’s service users, or because they have already been formally appointed to the Board) has added to the cause for concern.
As a bare minimum, a prospective Board member should be asked to sign a declaration that they are not disqualified from acting as such (i.e. if they have an unspent criminal conviction involving dishonesty or deception, are an undischarged bankrupt or have been banned from serving as a company director).
Where Board members may actually work with children or vulnerable adults as part of their role and the organisation is legally entitled to carry out a check, you should ask the Board member concerned to consent to the obtaining of an official check through the Disclosure and Barring Service (‘DBS’) and to confirm that they will provide a copy of the certificate to the organisation once received. There are different types of checks available and the organisation should ensure that they only seek a DBS check to cover the relevant concern (e.g. children or vulnerable adults as appropriate) and that the correct level of check is obtained. An enhanced DBS check for example will disclose all (with the exception of information that is filtered out of the same) of the following:
- criminal convictions (spent and unspent);
- cautions (spent and unspent);
- police reprimands and warnings;
- other relevant police information; and
- where appropriate to the role, information held on the statutory lists of individuals considered unsuitable to work with children or vulnerable adults (barred list check - only available for those who have close and unsupervised contact with children or vulnerable adults).
To find out more about DBS eligibility click here.
Organisations should also check that their constitutional documents contain safeguards that enable organisations to obtain updated information in respect of its Board (or community panel) members (either by virtue of obtaining updated checks or by members agreeing to subscribe to the Update Service), and that enables membership to be reviewed and terminated if there is potential for reputational damage. This ensures that, where a Board member has already been appointed and the organisation is concerned, then the issue can be considered and put to the Board who can take a fully informed decision on whether or not that person may remain in that role, whether they could be moved to another role or whether their appointment should be terminated. In taking such decisions however, organisations should ensure that the individual Board member concerned gives permission to the sharing of this personal sensitive data for these purposes.
For more information
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
Sometimes half an hour at a conference gives you the reality that has been staring you in the face all along. That was my experience watching “Change is on the Horizon”
Following our recent e-briefing on Possession Notices, Helen Tucker and Emilie Pownall from our housing litigation team discuss the impact of the changes on social landlords.
Not only has the possession stay been extended until 20 September, the notice periods to be given to tenants has been extended in certain circumstances with some important exceptions.
The Court has confirmed that a party cannot withhold its consent in order to re-write the original bargain.
Following the Grenfell Tower tragedy, building safety continues to be a key concern for social housing providers and their residents.
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