A 22,000-home landlord had its governance rating downgraded by the Regulator of Social Housing after owning up to not correctly implementing rule changes within its group structure.
Yorkshire-based Incommunities Group was downgraded from ‘G1’ to ‘G2’, meaning it is still compliant for governance, but there are weaknesses in its risk management.
The housing association had self reported itself to the regulator saying that it had not implemented rule changes correctly, for two of its subsidiaries, in April 2018, according to the regulatory judgement.
The error was not discovered until May 2020, by which time the group had refinanced and issued a bond, meaning the subsidiaries made incorrect certifications about their rules to lenders. Decisions made between April 2018 and May 2020 had to be re-ratified by Incommunities and the affected subsidiaries “including in respect of its funding arrangements”.
The regulator says Incommunities’ internal controls did not ensure that the new rules were implemented correctly or identify that it had not registered them with the Financial Conduct Authority. The HA has since worked with funders and lawyers to rectify the situation, although for a while they were reliant on the goodwill of their funders.
The group has now “commenced work to strengthen its internal control framework and is keeping the regulator informed of its progress”, the judgement said.
Incommunities’ financial viability rating remains unchanged at ‘V1’ following an in-depth assessment that found it has an adequately funded business plan, has sufficient security in place and is forecast to meet its financial covenants.
By Patrick Mooney, Editor