Decision

Regulatory Notice: Easy Housing Association (28 March 2023)

Published 28 March 2023

Applies to England

RSH Regulatory Notice

• Provider: Easy Housing Association
• Regulatory code: 4670
• Publication date: 28 March 2023
• Reason for publication: Economic Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

a) Easy Housing Association (Easy) is non-compliant with the governance and viability elements of the Governance and Financial Viability Standard.

b) Easy has not been able to demonstrate that it has managed its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight.

c) Easy has failed to ensure that it has an appropriate, robust and prudent business planning, risk and control framework and that it has managed its resources effectively to ensure its viability can be maintained.

d) Due to weaknesses in its governance arrangements, Easy has not been able to provide the necessary assurance that it complies with the Home Standard and as such we lack assurance that tenants are not at risk of harm.

e) Easy has not been able to provide the assurance that it is compliant with the Rent Standard.

The Case

Following a statutory referral, the regulator began an investigation into one of Easy’s properties that is alleged by Birmingham City Council to have been established without the requisite planning permission. As part of this investigation wide-ranging governance concerns were uncovered leading to the publication of this regulatory notice.

The Regulator’s Findings

Although based in London, Easy’s business model is to enter short-term leases in Birmingham and use these properties for the purposes of supported exempt accommodation.

It is the regulator’s judgement that Easy’s governance arrangements are underdeveloped and inadequate for the size of the organisation.

The board has failed to exercise adequate oversight of the organisation, as the board of directors do not have sufficient board information or receive adequate reporting on performance and health and safety. As a consequence, it is unable to demonstrate that it is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight.

We lack assurance that Easy has complied with the specific expectation to assess the effectiveness of its governance arrangements at least once a year. We have no assurance that a governance effectiveness review has been carried out. While the NHF Code of Governance has been adopted by the board, we do not have the assurance that Easy has ever undertaken an assessment against this code to ascertain its compliance.

We have seen limited assurance regarding the board having the right competencies, experience, and technical knowledge appropriate to the size, scale and risk profile of the organisation, or that this is regularly assessed. We have not seen any evidence that Easy had plans in place to address any skills gaps identified (including by bringing in external skills), and such plans are monitored to ensure that they are followed through. A new chair has been appointed recently which has brought additional skills and experience to the board, but it is too early to tell if this will have the desired impact on overall board performance.

Easy’s business planning, risk and control framework is also underdeveloped and inadequate for the potential risks to the organisation. The regulator has concluded that the board’s risk management framework is ineffective in identifying and managing risks associated with its strategy to enter lease obligations on its stock.

We have seen no reference to any risk appetite or meaningful risk tolerances within Easy’s reporting. Risks are poorly articulated, and mitigations do not appear to help the board control the presenting risks. The risks identified are limited and do not cover all areas we would expect from an organisation undertaking this business model. The board reporting we have seen has been of limited quality.

We lack assurance that financial forecasts are based on appropriate and reasonable assumptions and that Easy has effective systems in place to monitor and accurately report delivery of the registered provider’s plans. Its business planning is also limited and it has not carried out any stress testing of its business plan. We have no assurance that Easy has certified in the annual accounts its compliance with the Governance and Financial Viability Standard.

Through our engagement, we have found a lack of assurance that Easy has in place a thorough, accurate and up-to-date record of its assets and liabilities, and particularly those liabilities that may have recourse to social housing. The Asset and Liability register we have seen is underdeveloped, does not meet the required standard and is limited in scope.

Due to significant weaknesses in its governance arrangements, we have not seen sufficient evidence that health and safety risks are adequately managed or that Easy’s board receives the necessary assurance that its stock meets all applicable statutory requirements in relation to health and safety.

Easy has not been able to provide the regulator with sufficient evidence to demonstrate how it complies with the Rent Standard, or how its stock meets the definition of Social Housing

Easy has been engaging and working positively with the regulator during our engagement. It acknowledges the extent of its failings in regard to the Standards and is committed to undertaking the work necessary to come back to compliance. It has developed a programme of work to facilitate this and has obtained external resource to support it in this task. Although work is in its early stages, there has been some initial progress against its improvement plans over recent months.

Section 220 of the Housing and Regeneration Act 2008 states that the regulator’s regulatory and enforcement powers may be used if a registered provider has failed to meet a standard under section 194 of the Act. The regulator is considering what further action should be taken, including whether to exercise any of its powers.

About the provider

Easy was registered in August 2011 and designated as a not-for-profit provider. Easy is a private company limited by guarantee and is also registered with the Charity Commission.

Based on its most recent Statistical Data Return, Easy had 213 units and is classed as a small provider. The regulator does not publish regulatory judgements for providers that fall into this category. Instead, in the interests of transparency, the regulator publishes a Regulatory Notice where it has evidence that a small registered provider is not meeting the regulatory standards. This notice is published under those arrangements.

About our Regulatory Notices

Regulatory notices are issued in response to an event of regulatory importance (for example, a finding of a breach of the Rent Standard or of a consumer standard that has or may cause serious harm) that, in accordance with its obligation to be transparent, the regulator wishes to make public. More detail about Regulatory notices is set out in Regulating the Standards.