Decision

Regulatory Notice: Windrush Alliance UK Community Interest Company (13 September 2023)

Updated 13 September 2023

Applies to England

RSH Regulatory Notice

• Provider: Windrush Alliance UK Community Interest Company
• Regulatory code: 4671
• Publication date: 13 September 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) Windrush Alliance UK Community Interest Company (Windrush) is non-compliant with the governance and viability elements of the Governance and Financial Viability Standard.

b) Windrush 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) Windrush 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) There is a lack of assurance that Windrush has not inappropriately advanced the interests of third parties in its lease deals, connected party transactions and payments to both internal and external individuals.

e) Due to weaknesses in its governance arrangements, Windrush has not been able to provide the necessary assurance that it complies with the Home Standard.

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

The Case

The regulator began an investigation following receipt in mid-June of a self-referral by Windrush regarding governance and financial viability concerns. Our investigations identified a fundamental breakdown in governance, and uncertainty regarding board level control and the make-up of senior management.

The Regulator’s Findings

Based in Nottingham, Windrush provides general needs, supported housing and non-social supported exempt accommodation. Its housing is primarily delivered through leasing properties from third parties on short and long-term leases that are then made available to its tenants.

The regulator’s Standards require that registered providers shall ensure effective governance arrangements that deliver their aims, objectives and intended outcomes for tenants and potential tenants in an effective, transparent and accountable manner. There had been a fundamental breakdown in Windrush’s governance and financial management arrangements, which put the continuity of services to residents at risk. Legal disputes arose in relation to issues regarding overall control of the organisation and wider governance arrangements. This is a clear breach of the Governance and Financial Viability Standard.

The current board and management team are working to address these issues but, due to historic failings, do not have reliable data or information on which to run the business. Windrush acknowledges the very serious position it finds itself in; that it is unable to evidence compliance with most aspects of the regulatory framework and will need to substantially improve the financial and governance structure and processes within the organisation.

There is a lack of assurance on the financial stability of Windrush. The financial information we have been given presents a picture of an organisation without the basic information needed to adequately manage the finances of a registered provider. The management accounts of Windrush seen to date are unreliable and Windrush has recognised they do not present a true picture of the organisation’s finances. There are a number of ongoing contractual disputes with a range of external bodies and Windrush does not have the data or information to understand the extent of its liabilities or monies owed to it. For this reason, we are concerned about the ongoing solvency of the organisation and its long-term future.

Windrush does not have a robust and prudent business plan that reflects its business model. It does not have adequate financial forecasts that are based on appropriate and reasonable assumptions or effective systems in place to monitor and accurately report delivery of its plans. No assurance has been provided to show that the financial and other implications of risks to the delivery of plans, are considered by Windrush. The lack of an appropriate business plan is compounded by not having undertaken any stress testing.

There is no assurance that Windrush has in place a thorough, accurate and up to date record of its assets and liabilities, particularly those liabilities that may have recourse to social housing assets. No assets and liabilities register is available, as it is currently being developed. This is compounded by Windrush being unsure of the number of properties that it owns or leases and struggling to provide basic information on its properties.

There is a lack of assurance that Windrush, before taking on new liabilities in the form of long and short-term leases, has understood and been able to manage the risks and impact on its business. This is demonstrated most starkly in a novel operating model used in many of its leased properties where service level agreements signed by Windrush, effectively cede control of many regulatory and legal obligations to third parties, including being able to represent themselves as Windrush.

Coupled with the above we lack assurance that Windrush has not inappropriately advanced the interests of third parties in its lease deals, connected party transactions nor inappropriate payments to both internal and external individuals.

There is a lack of assurance that Windrush has an effective risk management and internal controls assurance framework. We have seen no reference to any risk appetite or meaningful risk tolerances within its reporting. The board reporting we have seen has been of poor quality with no reference to risk management. 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 Windrush has been managing its health and safety obligations adequately or that tenants are safe in their homes. We have seen no assurance this is monitored and overseen at board level. We have asked for assurance regarding compliance with statutory health and safety requirements and Windrush has not been able to provide any evidence of this.

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

Windrush has not been able to provide assurance that it complies with the requirements of the Rent Standard, and previous Welfare Reform and Work Act 2016 requirements, in the setting of its rents in both its excepted units and its general needs stock. Windrush has also not been able to demonstrate its rents are below the market rate and so it has not demonstrated that the relevant homes can be classified as social housing.

Windrush’s new board and management team are engaging and working positively with us. Windrush acknowledges the extent of its failure to meet the Standards and has made a commitment to undertaking the work necessary to come back to compliance.

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. As the regulator, we are considering what further action should be taken, including whether to exercise any of our powers.

About the provider

Windrush was registered in August 2011 and designated as a not-for-profit provider. Windrush is a private company limited by guarantee.

Based on its most recent Statistical Data Return, Windrush had 458 units of social housing and 1,621 units of non-social housing and is classed as a small provider.

About our Regulatory Notices

The regulator does not publish regulatory judgements for small registered providers. 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. Regulatory notices are issued in response to an event of regulatory importance 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.