Decision

Regulatory Notice: Eldonian Community Based Housing Association Limited (19 July 2021)

Updated 19 July 2021

Applies to England

RSH Regulatory Notice

• Provider: Eldonian Community Based Housing Association Limited
• Regulatory code: C3609
• Publication date: 19 July 2021
• Governance grade: N/A
• Viability grade: N/A
• Reason for publication: Economic Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

a) Eldonian Community Based Housing Association Limited (Eldonian CBHA) is non-compliant with the Governance and Financial Viability Standard. It has failed to ensure that its governance arrangements are effective and have not complied with their own governance documents as part 1.1 of the standard requires.

b) Eldonian CBHA is unable to demonstrate that it has an appropriate, robust and prudent business planning, risk and control framework in place in line with 2.4 of the Governance and Financial Viability standard.

c) Eldonian CBHA has failed to ensure it is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness prudence and foresight (2.2 of the Governance and Financial Viability standard).

d) Eldonian CBHA has failed to communicate with the regulator in a timely manner on material issues that relate to non-compliance with our standards (2.7 of the Governance and Financial Viability standard).

The Regulator’s Findings

The regulator has concluded that it lacks assurance and evidence that Eldonian CBHA is compliant with the governance element of the Governance and Financial Viability Standard.

In April 2021 the regulator received a copy of an independent report on the governance of Eldonian CBHA dated October 2020. This report concluded that the Management Committee did not understand its responsibilities, was not meeting the regulatory standards, and lacked capacity to address the issues. Around the same time, the regulator received information which indicated that there was no executive team in the organisation following the recent retirement of the Chief Executive and Finance Director, and that all but one of the Management Committee members had also recently resigned.

Through our investigations and information obtained, including our engagement with Eldonian CBHA, we have identified a serious breakdown in the governance, operations and control framework of the provider at the most basic level, which impacts upon the provider’s ability to operate effectively and within vires, potentially putting tenants and social housing at risk. Eldonian CBHA subsequently took steps to appoint a number of non-tenant members to the Management Committee, contrary to its constitution.

As a result of these failures we have concluded that Eldonian CBHA has failed to ensure that its governance arrangements are effective or meet the required outcomes of Governance as set out in the Governance and Financial Viability Standard.

There are significant weaknesses in the leadership of the organisation both at executive level and within the Management Committee. The executive positions are now being covered by interim officers, and recent attempts to add new independent members to the Management Committee were in breach of the organisation’s rules. We therefore lack assurance that Eldonian CBHA is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence, and foresight. We also lack assurance that Eldonian CBHA is adequately managing its financial resources and any potential conflicts of interest.

Eldonian CBHA did not alert the regulator to the existence of the independent governance report which set out a range of longstanding governance concerns and have failed to take action to implement the recommendations despite having received the final report in October 2020. Eldonian CBHA also did not communicate with the regulator about the significant weaknesses in its leadership and management team. This is a fundamental failure of Eldonian CBHA’s governance arrangements and a breach of part 2.7 of the Governance and Financial Viability Standard.

Eldonian CBHA has now started to assess its current position in respect of compliance against our regulatory standards. It has appointed consultants to senior management positions on an interim basis to take this work forward. Eldonian CBHA has expressed its commitment to working with the regulator to address the issues raised in this notice. The regulator will continue to engage with Eldonian CBHA as it seeks to become compliant with the regulatory standards and will consider whether any further regulatory action is required.

Based on the most recent Statistical Data Return (SDR), Eldonian CBHA has fewer than 1,000 homes and is classed as a small provider. The regulator does not publish regulatory judgements for providers which 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 the provider

Eldonian CBHA was registered in 1985 and is a non-charitable community benefit society registered with the FCA.

The SDR for March 2021 stated Eldonian CBHA owns or manages 394 units in Liverpool, comprising 346 general needs social housing units, 36 units of homes for older people and 12 units of local cost home ownership.

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.’

Key to Grades

Governance:

• G1 (Compliant): The provider meets our governance requirements
• G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance
• G3 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
• G4 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

Viability:

• V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
• V2 (Compliant): The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.
• V3 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
• V4 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.