Derwent rated “non-compliant” by HCA

The Homes & Communities Agency (HCA) has downgraded a Derby-based social housing provider after discovering “issues of serious concern” in its governance and financial viability.

Derwent Housing, parent of Derwent Living which manages over 25,000 properties in the Midlands, had seen its governance and viability ratings lowered to G3 and V3 respectively, meaning the housing provider is no longer considered compliant with HCA’s Governance and Financial Viability Standard.

The HCA stated the housing association lacked a sufficiently developed risk management strategy and transparency within the group, particularly with regards to the ownership of assets and contractual responsibilities between the subsidies. The regulator added “the lack of effective monitoring and non-compliance with loan covenants” had lead to “a loss of control” and recommended “strengthening” of the board.

HCA also expressed concerns with Derwent’s financial capacity to manage its exposures, effectively monitor its covenant compliance and added the HA had been unable to provide evidence of effective mitigation strategies put into practice.

The HCA concluded:

“Derwent’s understanding of its assets and liabilities has not been sufficiently developed to identify and manage the risk flows associated with group’s activities and financial arrangements.

“The information presented to the board and regulator has been inconsistent, and together with the issues in monitoring covenant compliance has led to a loss of confidence in its accuracy and reliability. The regulator is therefore not assured of the robustness and quality of data for financial planning and reporting purposes.”