The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
IDAs will assess an RP’s quality of governance, assessment of risk and its risk mitigation strategies. It is not yet clear whether value for money will feature as part of all IDAs (and differing approaches have been taken during the pilot programme). The Regulator has indicated that it will take a ‘first principles’ approach, starting from the premise that the RP has a G4/V4 rating, with the onus on the RP to give sufficient assurance that they are at the appropriate governance and viability ratings. This demonstrates a marked change to the approach previously taken by the Regulator, where a move away from current straplines for an RP (in effect) had to be justified by the Regulator.
Moody’s were quoted in Social Housing magazine earlier this year as saying the financial difficulties experienced by Venture Housing Association showed the ‘limitations’ of co-regulation. The Regulator’s introduction of IDAs has been likened by Jonathan Walters, Deputy Director of Performance and Strategy, to the approaches taken by such ratings agencies and is therefore clearly intended to give greater comfort that the business plans and governance arrangements being put in place across the sector are being tested robustly against the requirements of the Regulatory Framework.
The Regulator has stated that this should not be a move back to the KLOE days of the Audit Commission, with a checklist approach to assessing an RP’s governance and financial viability. Feedback on the pilot IDAs supports the validity of this statement. Speaking at a recent Placeshapers event with Charlie Norman (Chief Executive, St Vincent's Housing Association), Richard Foster (Senior Investigation and Enforcement Advisor, HCA) reinforced the point that a bespoke approach was, and would be, taken to each IDA, with key areas of concern in relation to individual organisations identified and assessed.
The concern is whether this level of individual treatment and investigation can realistically be undertaken with every organisation, if the Regulator is to achieve its suggested programme of carrying out an IDA for every RP (owning over 1,000 units) at least every four years (with additional IDAs carried out as necessary for ‘rapidly changing’ and riskier RPs).
The IDA, if it is to be delivered in line with the approach taken to the pilot programme, will prove a useful tool for RPs. The IDA will test the strength of their business and governance arrangements to ensure they are fit for purpose and able to deliver their desired objectives, and will also deepen the Regulator’s understanding of each RP’s business. Undoubtedly there’s also the potential for the strengthening of the relationship between individual RPs and the Regulator.
However, if a ‘straitjacket’ approach is taken, it will bring into question the usefulness of the IDA and what it will add to current regulatory tools, given the ever more diverse nature of the sector and the increase in more complex governance and funding arrangements.
Both the Regulator and RPs need to keep sight of the fact that IDAs should be a means to an end – strong and effective organisations – rather than an end in themselves.
For more information
Contact Gemma Bell.
The government announced on 16 May that it will provide a fund of £400m to cover the costs of removal and replacement of cladding to high rise residential blocks which have failed tests.
Whilst some people are under the impression that preparing a Lasting Power of Attorney (LPA) is simply a case of completing a form and ticking a few boxes, it is about far more than this.
A big fear for some people facing divorce and the inevitable carving up of the matrimonial assets. They seek assurances that such assets will be “ring-fenced” and retained for them.
Thinking about the legal status of being a cohabitant probably isn’t at the top of the ‘to do’ list.
When an individual is thinking about making a gift to another individual, consideration needs to be given to the Potentially Exempt Transfer (PET) trap.
We are now only a few weeks away from the biggest change to data protection laws in over 20 years. Are you compliant?
The tragedy, in this case, is that there were options readily available to the midwives that they could have used. This was not a case of having to go above and beyond.
Arising from the recent Family Division announcement, people who think they are legally divorced may in fact still be married.
The SCCS has issued providers in the scheme a series of updated and new documents in order to assist with their National Minimum Wage review.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.