Decision

Previous regulatory judgement: Empowering People Inspiring Communities Limited (31 May 2023)

Updated 15 November 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Empowering People Inspiring Communities Limited

• Regulatory code: L4167

• Publication date: 31 May 2023

• Governance grade: G2

• Viability grade: V2

• Reason for publication: Governance upgrade

• Regulatory route: Stability Check and Reactive Engagement

Regulatory judgement

This regulatory judgement upgrades our assessment of Empowering People Inspiring Communities Limited’s governance from G3 to G2 and confirms its V2 grade for viability.

The regulator now has assurance that Empowering People Inspiring Communities Limited’s (EPIC) governance arrangements support the organisation to meet its objectives. However, there are some aspects of its governance that still need improvement to support continued compliance.

The regulator’s previous assessment in August 2021 concluded that EPIC had failed to manage its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight. EPIC’s board had made significant business decisions around growth and deferred fire safety expenditure without fully understanding or considering the impact on its approved business plan and its covenant compliance. It had also failed to maintain adequate oversight of its activities, particularly in relation to its health and safety obligations. This resulted in a breach of the Home Standard and a Regulatory Notice was published at the same time as the judgement.

Since August 2021, EPIC has strengthened its governance arrangements through a refresh of its board based on an independent skills assessment, a full review of its rules and articles, and enhancing its executive capacity. It has considered its strategic objectives and agreed a new corporate plan for the period until 2025.

It has improved its reporting to the board with enhanced financial reporting, including covenant compliance monitoring and operational reporting including performance measures, which has enabled improved scrutiny and oversight of its activities and key risks.

Following the publication of the Regulatory Notice, EPIC delivered on a plan to complete its outstanding fire safety remedial actions. It also developed a second, medium term fire safety improvement plan that it has started and will complete by the end of 2024. It has refreshed its stock condition survey and the cost of maintaining its homes to the required standard is now fully accounted for within the revised financial forecasts.

The EPIC board commissioned an independent assessment from external consultants and internal auditors to provide it with assurance that the changes it has made so far are effective. EPIC plans to undertake a further assessment as it continues to deliver its stock condition, fire safety and financial plans, to seek additional assurance that it continues to manage its risks to maintaining compliance.

The regulator’s assessment of EPIC’s compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. Based on evidence gained from a Stability Check and Reactive Engagement, the regulator has assurance that EPIC’s financial plans are consistent with, and support, its financial strategy. EPIC has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

EPIC’s planned increased investment in its existing homes, including the additional asset management costs relating to fire safety, puts pressure on its financial position, which in combination with economic uncertainty in relation to inflation and interest rates, reduces EPIC’s capacity to respond to adverse events.

Other providers included in the judgement

None

About the provider

Origins

EPIC was established in 1988 following a stock transfer from Stoke on Trent City Council. It is a not-for-profit registered provider and registered charity that aims to provide homes for people who are unable to rent or buy on the open market.

Registered Entities

EPIC is the only registered entity.

Unregistered Entities

There are no unregistered entities.

Geographic Spread and Scale

EPIC owns or manages around 1,400 homes located in North Staffordshire.

Staffing and Turnover

EPIC employed 19 full-time equivalent staff and had a reported turnover of £5.4m in the year ended 31 March 2022.

Development

EPIC has no current plans to develop new homes, instead it is investing in its existing stock.

About our judgements

Key to Grades

Governance:

	Compliant
G1	The provider meets our governance requirements.
G2	The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

	Non-compliant
G3	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	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:

	Compliant
V1	The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2	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.

	Non-compliant
V3	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	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.

Note: The use of an asterisk (*) against a grade indicates that the assessment refers to a provider that is designated as being for-profit.

Definitions of Regulatory Routes

In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.

Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.

Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.

Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.

For further details about these processes, please see Regulating the Standards.