Decision

Regulatory Notice: Brent Community Housing Limited (18 June 2021)

Updated 18 June 2021

Applies to England

RSH Regulatory Notice

• Provider: Brent Community Housing Limited
• Regulatory code: 4748
• Publication date: 18 June 2021
• Governance grade: N/A
• Viability grade: N/A
• Reason for publication: Economic Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

This regulatory notice supersedes the notice published on 31 July 2019 and is a result of intensive regulatory engagement with Brent Community Housing Limited (BCH).

The regulator has concluded that:

a) BCH remains non-compliant with the Governance and Financial Viability Standard. It has not managed its resources effectively to ensure its viability can be maintained and has not ensured its governance arrangements are effective.

b) BCH 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) BCH has failed to ensure that it has an appropriate, robust, and prudent business planning, risk and control framework that ensures sufficient liquidity at all times.

The Case

BCH was assessed as non-compliant with the Governance and Financial Viability Standard in July 2019 for failing to submit annual accounts, and therefore failing to provide assurance of its financial viability. It remains non-compliant and breaches of the regulatory standards persist.

BCH had been operating with a lack of effective board oversight in a range of areas. This is a fundamental failure of governance and operational control. The impact of this failure is that BCH did not have appropriate probity arrangements in place, and as a result, a material sum of money is unaccounted for. While BCH does now have arrangements in place to allow it to take decisions about its future, this was a serious failure in governance.

The evidence now available to the regulator demonstrates that BCH is unable to meet its obligations under its lease arrangements as and when they fall due and its financial position is acute. BCH has taken advice on its financial position and following permission by the court, has passed a resolution for a voluntary winding up of the organisation. Notice of the application to court triggered the regulator’s insolvency processes. During this period, the regulator will work closely with BCH and its advisors as it manages the situation, taking into account the needs of BCH’s tenants.

Based on its most recent statistical data return, BCH had fewer than 1,000 units and is classed as a small provider. The regulator does not publish regulatory judgements for providers which fall into this category. 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.

About the provider

BCH was registered in January 2013 and designated as a not-for-profit provider. It is a fully mutual co-operative which means it is owned by its members and is directed by a management committee drawn from its membership.

BCH owns and manages 19 units of social housing. It predominately enters into lease arrangements to acquire homes which are then used to provide accommodation to tenants.

About our Regulatory Notices

Regulatory notices are issued in response to an event of regulatory importance (for example, a finding of a breach of the Rent Standard or of a consumer standard that has or may cause serious harm) 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.’

Key to Grades

Governance:

• G1 (Compliant): The provider meets our governance requirements
• G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance
• G3 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
• G4 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

Viability:

• V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
• V2 (Compliant): The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.
• V3 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
• V4 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.