Decision

Regulatory Notice: First Priority Housing Association Limited (12 February 2018)

Updated 12 February 2018

Applies to England

RSH Regulatory Notice

• Provider: First Priority Housing Association Limited
• Regulatory code: 4702
• Publication date: 12 February 2018
• Governance grade: N/A
• Viability grade: N/A
• Reason for publication: Governance Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

a) based on the evidence submitted directly by FPHA, including communications from the board of directors and the Chief Executive Officer in January 2018, FPHA is not compliant with the Governance and Financial Viability Standard.

b) the board has failed to ensure that it operates an appropriate strategic planning and control framework that identifies and manages risks to the delivery of its objectives and their planning has not sufficiently considered the financial implications of risks to the delivery of plans.

Subsequent enquiries and investigations undertaken by the regulator suggest that FPHA does not have sufficient working capital or the financial capacity to meet its debts as they fall due. The regulator has concluded that FPHA has failed to secure access to sufficient liquidity because it continues to trade on the goodwill of its creditors. FPHA is working with its creditors and lender to find a solution to its current financial difficulties.

The regulator also has concerns about the governance arrangements within the organisation, particularly the adequacy of resources and the skill and capability of the board to maintain effective control of the organisation. The fact the board is dependent on the goodwill of its lease counterparties in relation to rent payments indicates a fundamental failure of governance.

The board of directors and the Chief Executive recognise the seriousness of FPHA’s situation and are working positively with the regulator. The regulator has taken steps to strengthen FPHA’s board by appointing new board members with a range of relevant skills and expertise. These additions to the board will support FPHA as it works through the complex matrix of difficulties it faces.

Based on the most recent SDR return FPHA had fewer than 1,000 units and is classed as a small provider. The regulator does not publish regulatory judgements for providers who 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

First Priority Housing Association Limited (4702) is a small Registered Provider of homes for a vulnerable client group, primarily adults with learning disabilities and mental health problems. It was incorporated in 2011 but has grown substantially in the last 18 months and now has leased properties with 26 landlord counterparties in total. The provider has 227 individual properties in 50 local authority areas that number 1,0751^{[footnote 2]} bed spaces with 759 tenancies currently in place.

In autumn 2017 First Priority Housing Association Limited (FPHA) advised the regulator that it had terminated its contract with its managing agents and had appointed a new Chief Executive. Production of the Annual Accounts had been delayed and they have still not been submitted.

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.

1. The provider has exceeded 1,000 homes or bedspaces in the period since the last statistical return to the regulator. ↩