Regulator appoints directors to manage housing co-operative

Housing regulator, the Homes and Communities Agency (HCA), has appointed four members to the board of a housing co-operative in North London. The decision was taken after the co-operative failed to...

Housing regulator, the Homes and Communities Agency (HCA), has appointed four members to the board of a housing co-operative in North London. The decision was taken after the co-operative failed to meet the regulator’s governance and financial visibility standards.

Quadrant Brownswood Tenant Co-operative (QBTC), which was established in the 1980s and manages 141 homes, has experienced a number of disputes among members of the co-operative that has led to difficulties in maintaining an effective committee, according to the regulator.

At the regulator’s request, the housing co-operative commissioned an independent governance review. The review concluded that significant improvements were needed to enable QBTC to meet the standards.

Blase Lambert, chief officer at the Confederation of Co-operative Housing, conducted the review of between June and December last year. He explained: “We produced a code of governance in partnership with National Housing Federation and an accreditation framework which enable housing co-ops to comply with the HCA Regulatory Framework, which we provide to all housing co-ops.”

Following the investigation a number of recommendations were submitted to QBTC and the HCA. The regulator then made four statutory appointments to the QBTC Management Committee under section 269 of the Housing and Regeneration Act 2008, which is the first time the HCA has enforced these powers.

“Committee members chose not to take advice and have mismanaged the organisation for a sustained period of time. The HCA had a duty to engage and we aim to work with them in these situations,” said Mr Lambert.

He added: “It is a risk to our entire sector, and has knock on effects in terms of the broader social housing sector’s confidence in the co-operative model if these situations are allowed to go on unchecked. We provide advice and guidance and they are one of our member organisations but sometimes housing co-ops get into a position where external engagement and action becomes absolutely necessary.”

“They [QBTC] have been on the HCA’s radar for the last five years, not just for one particular thing, they were in whole scale breach of the regulatory framework and particularly its governance standard.”

Between September 2012 and May 2013 there were three general meetings organised, which elected different management committees. The first committee elected in September 2012 was not given control of the organisation and bank accounts by the outgoing committee.

“Over that period of time the HCA didn’t know who the management committee was. You can’t have a situation where certain people decide who is allowed to be involved in a co-op and who isn’t,” added Mr Lambert. “I would hope that now that the co-op has formally decided to outsource its management services this will stabilise and improve service delivery and would hope that with a current committee will start to address the serious problems.”

A similar action was taken in the early 2000s when Clays Lane Housing Co-operative in Stratford was warned by the previous regulator and had housing professionals appointed on its committee on three different occasions. This did not prove to be a lasting solution for the co-op, which found itself in crisis each time the appointees were withdrawn. The co-op was eventually closed down and demolished to make way for the Olympic Stadium.

“We are in a different situation with a different regulator, we would all be hopeful that this would assist members in finding the right track. The objective of any committee is to manage the organisation in a strong manner not spend time arguing with each other,” added Mr Lambert. “It is clear that a housing co-op should be able to govern itself and there are only a small number of cases that it becomes so serious. But, that said, we do feel that the HCA is right to act in such circumstances.”

The appointments are for a period of six months after which the position will be reviewed. A statement from the Homes and Communities Agency said: “The regulator remains concerned that the management committee is not exercising strategic oversight of the provider and continues to be unable to demonstrate effective control of the organisation, largely due to repeated disagreements and conflict; that the management committee has not yet properly addressed financial and other risk factors, in particular in asset management and in the use of litigation where other less costly actions may be viable; and further that the management committee has no strategic plan for the management of its assets nor the detailed information on which to base such a plan. The regulator retains significant concerns about the management committee’s ability to operate effectively and to agree and execute a strategy that is appropriate for and in the best interests of QBTC and its residents.”

It added: “Four officers have been appointed for a period of six months, after which the appointments will be reviewed and consideration given to whether the appointments need to be extended for a further period of time.  The appointees are senior housing professionals with the skills and experience necessary to provide additional capacity to the Management Committee. The regulator will continue to monitor QBTC closely until it is fully assured that QBTC is compliant with the regulatory standards.”

James Wright, policy officer at Co-operatives UK, explained that co-ops operate across all sectors of the economy, and although most share certain aspects of regulation relating to legal form, specific sectors of the economy are subject to varying degrees of regulation. He said: “Social housing is one sector that has its own distinct and quite centralised regulatory regime. Private sector housing has another less centralised regime of laws and statutory duties. Worldwide there is evidence of the co-op model operating successfully in almost every sector, and housing is certainly not an exception.

“There are some sectors in which the specific regulatory framework can create difficulties for co-ops; sometimes because of issues with legal form, other times because of the unique nature of co-op governance, and occasionally because of both. Sometimes it’s bad drafting of laws and regulations that needs to be addressed to help co-op entry. Other times the full flexibility of the co-op model needs to be embraced to find workable accommodations with a regulator.”

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