We have submitted our response to the White Paper Consultation based on the discussion held at the “Planning for the Future - what does this mean for affordable housing” webinar we held on Fri 9 Oct
The Regulator of Social Housing (the Regulator) last week published a revised version of ‘Regulating the Standards’, to reflect their revised approach to planned engagement with Registered Providers (RPs).
The new version of ‘Regulating the Standards’ updates the April 2018 version and sets out more regular planned engagement between larger and more complex RPs and the Regulator. This may indicate concerns from the Regulator that the current model of in-depth reviews every three or four years is not sufficient to allow them to obtain the necessary assurance as to how these RPs are operating in accordance with the requirements of the Regulatory Standards.
Key changes within the new ‘Regulating the Standards’ include:
Complex and/or large provider engagement
- Intention to carry out biennial In-Depth Assessments (IDAs) for the largest and/or most complex RPs instead of every three or four years.
- Holding annual planning engagement meetings with executive teams in the years that IDAs are not carried out (between August and December), leading to the period when the Regulator carries out its annual Stability Checks.
- Given rapid RP growth, if an RP self-reports that it has more than 1,000 units, the Regulator may immediately re-categorise the RP (outside of the Statistical Data Return-reporting timelines) as a large provider, and therefore that RP will be subject to greater regulatory scrutiny.
Interim regulatory judgements
- The Regulator may issue an interim regulatory judgement if two or more RPs merge, or if an RP undergoes (what the Regulator judges to be) a significant constitutional change.
- A new clarificatory table sets out scenarios when interim judgements may be issued and the Regulator’s approach to these.
- Clarity that a G3 grading means that the Regulator will engage with the RP.
The economic standards and stress testing
- The Regulator expects boards to be able to demonstrate that they have considered long-term, cyclical economic factors that impact on the business, as well as internal business risks and one-off shocks.
- Boards are expected to demonstrate ownership of stress testing and as part of an IDA, the Regulator will explore how boards identify risks and seek assurance that RPs stress test their plans across a range of sufficiently severe (but plausible) scenarios.
- The Regulator will seek assurance that an RP has established credible mitigation strategies to restore its financial position in the event of risks materialising, and understands the effectiveness of these, as well as the trigger points for their implementation.
Clarification of the Regulator’s expectations from the IDA model
- The Regulator has expanded its assessment focus against its five IDA components. These relate to strategy, structure, risk profile and mitigation, governance, and financial resilience.
Value for Money (VfM) and communication with the Regulator
- Reflecting the Regulator’s recent emphasis on the importance of data integrity, RPs should have appropriate control arrangements in place to ensure information that they supply about regulatory returns, and any other information requested by the Regulator, is accurate.
- Transparency is key; all information must be sufficiently clear to enable stakeholders to understand an RP’s performance and how they are achieving VfM.
- Organisational and contact details must be kept up-to-date.
For further information relating to the revised ‘Regulating the Standards’, please contact Catherine Simpson.
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