What can we learn from interacting with the regulator?

Despite what some may think interaction with the regulator needn’t be doom and gloom. The Homes and Communities Agency Regulation Committee is responsible for setting out, and enforcing the regulatory environment. If a situation arises were a provider is deemed to have failed to meet a consumer standard which has caused or may cause serious detriment to tenants or potential tenants then the regulator is able to intervene and take action.

How common are referrals and breaches?

In the last two years there have been 1500 consumer referrals to the regulator. There were 589 referrals in 2015 and 461 in 2016, which shows a 22% decrease in the last year. Of the 1500 referrals, 439 (42%) went to the Consumer Regulation Panel, 181 (18%) were investigated further, and only 10 cases found to be in breach of serious detriment. This amounts to less than 1% of the total number of referrals.

A statutory referral is a referral which comes from an authority or individual specified in the Housing and Regeneration Act 2008. These include the Housing Ombudsman, tenant representative bodies, MPs, a councillor of the local housing authority for the district in which the property concerned is located, the Health and Safety Executive, and fire and rescue authorities.

There were just 12 statutory referrals in 2015/16 compared to 19 in 2014/15.

What can we learn from them?

So what does this tell us? A referral doesn’t necessarily mean you’ll be downgraded. In fact - as the statistics show - it’s unlikely. Having effective co-regulation is integral to ensuring the sector is operating how it should. It ensures weaknesses are addressed and that action is taken to rectify any shortcomings. It can also mean any potential issues are resolved before they progress to a stage of severity which could result in a downgrade.

A referral needn’t be a blemish against the name of the respective provider and a self referral is not a mark of shame or a sign of crisis. Interaction with the regulator can have long-lasting, positive outcomes for many of the providers involved. Areas of weakness and compliance can be strengthened allowing the implicated organisation to come out the other side assured and more robust.

How to manage a referral

If referred, there are a number of actions we’d recommend. Firstly, it’s pivotal to have a full understanding of the issues you’re facing including where and how they originated and the effect it could have on the organisation and its stakeholders. Secondly, you should respond with a well defined action plan which demonstrates how you are controlling and rectifying the issue, as well as how you are preventing its recurrence. This may include systematic changes such as organisational and/or operational change. This is similar to a risk assessment and management approach. Thirdly, and perhaps most crucially, boards should be involved in and approve the plans and ensure the plans are controlled and monitored. The bullets below, quoted directly from the HCA, outline the factors the regulator will consider when investigating a potential breach in compliance with respect to the Governance and Financial viability standard:

• The effectiveness of the registered providers risk management and internal controls
• The effectiveness of the board’s oversight. For example, whether it was receiving adequate and timely information and challenging the executive on performance
• The registered provider’s transparency and the timeliness of communication with the regulator
• Any actions taken the mitigate the failure
• Whether the failure raises any wider systemic concerns
• How the board has assured itself that the failings will be addressed

Learning from past referrals

The Consumer Regulation Review produced annually by the HCA provides insight into the regulators interactions with the sector and outlines how they have reacted to the issues which have arisen in the previous year and more importantly, at least from our side, explains what action they took and why. This year’s review contains twelve case studies which cover gas safety, fire safety, the Home Standard, tenant eviction, anti social behaviour, neighbourhood safety, property alterations and complaints procedures. We see this as an important learning tool as well as providing insight into the referral process, which may help curtail any apprehension towards interaction with the regulator.

The full review can be accessed here