Withdrawn Regulatory Notice: Empower Housing Association Limited (6 September 2021)
Updated 26 April 2023
Applies to England
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This publication is available at https://www.gov.uk/government/publications/regulatory-judgement-empower-housing-association-limited/regulatory-notice-empower-housing-association-limited-6-september-2021
Withdrawn on 26 April 2023: The issues giving rise to Empower Housing Association Limited’s Regulatory Notice have been resolved.
RSH Regulatory Notice
- Provider: Empower Housing Association Limited
- Regulatory code: 4663
- Publication date: 3 September 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) Empower Housing Association Limited (Empower) is non-compliant with the governance elements of the Governance and Financial Viability Standard. It has failed to ensure that it has effective governance arrangements in place that deliver its aims, objectives and intended outcomes for tenants in an effective, transparent, and accountable manner.
b) Empower has failed to demonstrate that it has an appropriate, robust, and prudent business planning and risk and control framework in place. Empower has also not been able to demonstrate that it is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence, and foresight.
c) Empower is also non-compliant with the Rent Standard. Empower has been unable to provide adequate assurance that the accommodation it provides meets the Government’s definition of Specialised Supported Housing (SSH) and so that it is excepted from the requirements of the Rent Standard.
The Regulator’s Findings
The regulator has concluded that it lacks assurance that Empower is compliant with the governance elements of the Governance and Financial Viability Standard and with the Rent Standard.
Empower’s main business involves entering into long-term lease arrangements with private landlords and charities to acquire homes that are then used to provide specialised supported housing to vulnerable tenants. Empower’s lease arrangements with its head landlords are for periods of up to 20 years and are index-linked. To manage its risks, the leases have break clauses so Empower or the landlord can end the lease, with a given notice period, during the term of the lease. Empower also owns a small number of properties. Care and support in all of Empower’s accommodation is provided to tenants by third parties, including the charities from which Empower leases the homes.
It is the regulator’s judgement that Empower’s governance arrangements are underdeveloped and inadequate for the size of the organisation. While Empower has three independent directors, the board has failed to exercise adequate oversight of the organisation, as the board of directors did not have sufficient routine meetings or receive adequate reporting on performance. As a consequence, Empower is unable to demonstrate that it is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight.
As a result of these weaknesses, there has been a significant failure by Empower to safeguard taxpayers’ interests and the reputation of the sector. Empower identified and informed the regulator of an issue relating to failures in financial and internal controls over a number of years. As there were inadequate controls in place, some financial payments and commitments occurred without approval or oversight of the board.
Empower’s business planning, risk and control framework is also underdeveloped and inadequate for the potential risks to the organisation. We have seen evidence that Empower had mitigated some of the risks of the business model which it operates, however the provider does not have a framework to record the risks identified or the controls in place. Empower’s business planning is also limited and it has not carried out any stress testing of its business plan.
Empower has not been able to provide the regulator with sufficient evidence to demonstrate how it complies with the Rent Standard, in particular that its properties meet the definition of specialised supported housing that would except it from the Rent Standard. It is a serious matter if an exception from rent requirements is inappropriately applied. As some of the cost of these rents has been met through Housing Benefit and Universal Credit, there may also be implications for the public purse.
Empower has started to take steps to improve its governance and is committed to working with the regulator to address the issues outlined in this Regulatory Notice. The regulator will continue to engage with Empower as it addresses these matters and seeks to come back into a position of compliance.
Based on the most recent SDR, Empower had 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
Empower was registered in July 2011 and designated as a not-for-profit provider.
In its 2021 Statistical Data Return (SDR), Empower reported that it owned and managed 448 units of social housing, categorised as supported housing.
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.