Within this update, we will also bring you up to speed with GDPR in 2019 (yes, it IS here to stay), discuss the implications of shadow directorship and consider the impact of the independent review of the Modern Slavery Act. We’ve also got some updated information of the new FCA portal and email addresses for the Charity Commission, see more below.
Brexit
With the uncertainty surrounding Brexit and whether a deal will be struck with the rest of the EU, housing associations are being encouraged to develop contingency plans to ensure their business plans and operations can handle the worst-case scenario (a no deal Brexit). The NHF, in January, produced a briefing outlining the key challenges faced by housing associations and steps that can be taken to prepare for the changes ahead. We have produced a summary of the main things to plan for, as identified in the briefing:
The Government has published a wide range of guidance, from state aid to public sector contracts and EU funding. Reviewing the applicable guidance, stress-testing future business plans and preparing for the worst-case scenario is vital for all organisations moving forward.
GDPR in 2019
The General Data Protection Regulations (GDPR) were brought into force on 25 May 2018, along with the Data Protection Act 2018 (DPA) and were designed to harmonise data protection privacy laws across Europe and provide greater protection and rights to individuals.
Many organisations process and store large amounts of personal data; for housing associations, this often includes general contact and financial information for tenants, as well as sensitive personal data such as race, religion and health information. It is, therefore, essential that organisations continue to focus on their obligations under both the GDPR and the DPA.
While all organisations should ensure they are compliant with the legislation, certain areas will need continuous improvement and advancement. These include:
As the UK is set to leave the EU on 29 March 2019, the processing, sending and receiving of personal data between the EU and UK will change. The EU may make an adequacy decision stating that the UK regime offers an adequate level of protection, in which case the transfer of data will remain the same. However, if no adequacy decision is made, organisations will need to ensure they implement certain safeguards. These may include, for example, including compliant clauses in any contracts entered into.
The ICO website has plenty of information for organisations concerned about the potential impact of Brexit on data protection laws and offers guidance on how to best prepare your organisation for either a deal or no-deal scenario. The following e-briefings may also be of interest:
The Dangers of Shadow Directorship
“Shadow directorship” arrangements can arise where there is a high level of crossover between Boards so that one organisation can effectively be said to be operating at the direction of another. The key concern in relation to this for social housing providers is where an organisation becomes insolvent (a wholly-owned commercial subsidiary, for example) because there is a risk that, in those circumstances, creditors may look to the “shadow director”, the social housing provider, in relation to wrongful or fraudulent trading claims potentially exposing social housing and/or charitable assets to risk.
Becoming a shadow director will not always be the intent of the person caught under the heading. However, the most common circumstances giving rise to shadow directorships include:
Risks in relation to shadow directorships can be managed in the through:
If you are concerned that individuals or entities within your organisation may be at risk of falling into the category of shadow directors, please get in touch with a member of the Housing Corporate Services Team for advice.
Independent review on the Modern Slavery Act
A review on the Modern Slavery Act 2015 (the Act) was announced in July 2018. Following this announcement, the Home Office released a second interim report with the intention of increasing transparency in business supply chains (addressed within section 54 of the Act). The perception is that this section lacks teeth in that it is only organisations turning over £36 million (or more) per year that are required to release an annual statement to confirm compliance with the Act and outline whether they are taking any steps to tackle modern slavery in their current supply chains.
The recommendations of the review are intended to increase the accountability of directors for failing to comply with their duties under section 54 of the Act. There is a specific recommendation for companies to assign a designated board member to take charge and be personally accountable for the production of the modern slavery statement. Another recommendation calls for the Companies Act 2006 to be amended so that there is a requirement for companies to refer to their modern slavery statement in their annual reports.
The full review is due to be published in March 2019.
New FCA Portal
The FCA has launched a new portal where certain documents can be completed online, rather than traditional submission via email or post.
The portal can be used for the following services:
The new portal allows you to receive updates via email about the status of any application you have submitted via the portal.
It is also faster for annual returns to be submitted, as these can be uploaded directly onto the Mutuals register within 48 hours, rather than the usual 6-week period.
To register for this service, you will need to register yourself as a user online at societyportal.fca.org.uk/account/registration.
You will then have to associate your account with a society. The FCA will send out a letter containing a password to the registered address of the society. If an organisation intends to use an account for a number of societies, it will need to get authorisation passwords for each society that intends to be registered for portal services.
You can find a link to the portal here.
New email address for the Charity Commission
The Charity Commission announced in its last newsletter that it is changing its email addresses.
Effective from the 31 March 2019, the Charity Commission will no longer have “.gsi” in its addresses. The Charity Commission will update the email addresses on its website in time for this change.
Further information
For more information about any of the issues raised here, please contact Catherine Simpson.
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