Code of Governance Stephen Bull Head of Governance and Company Secretary, National Housing Federation

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1 Code of Governance 2015 Stephen Bull Head of Governance and Company Secretary, National Housing Federation

2 HCA Regulatory Framework Overarching narrative is Don t put your assets and viability at risk Identification and management of risk is the big change risk around RPs running their organisations and HCA in regulating the sector Emphasis on skills needed to run the business see NHF Code which aligns to this

3 HCA Regulatory Framework Robust business planning liquidity, sound financial forecasting, progress reports on BP, covenants monitored Comprehensive assets and liabilities register readily available Robust and multi variate stress testing test to destruction and have strategies to manage and mitigate the impact Comply with the law

4 Why a revision? First published in 1995 Last major revision in 2004 pay and tenure 2010 change of format Change in landscape Reg Framework and co regulation Funding models Structures Risk Cosmopolitan

5 Why a revision? Discussed with member organisations over time Emphasis on comply or explain HCA standards code Review of maximum tenure Risk and audit LSVT and board structures Tie into revision of model rules

6 Why a revision? Survey of all members Positive about the code helping to improve governance Credible industry wide standard Wanted to strip out some detail Review diversity section Stress role of board members Address challenges around skills, composition, regulation, renewal and succession

7 What else? Reflects some of the issues that have arisen in adverse regulatory judgements Non compliance with chosen code and no adequate explanations against areas Size of boards Renewal and length of service on boards (term and churn) Skills on boards Lack of understanding Poor internal controls Unaware of risks

8 Code of Governance 2015 Upfront principles of good governance Code split into requirements and provisions Code crisper now 13 pages Good practice section at the back

9 Section A Compliance with the code New section Clarification around the concept of comply or explain Expectation that HA publishes statement of compliance in annual financial statements Note that detail in rules, M&A etc take precedence

10 Section B Constitution and composition of the board Emphasises role of board members to act in the best interest of the organisation Role of the board to decide who it needs for the board Board size Importance of the company secretary Role of shareholders open and closed membership issues

11 Section C Essential functions of the board and chair Bringing together 2010 code part C and E and includes groups Clarity on role and duties of the board C1-2 behaviours highlighted C1-3 nod to VFM C3 power of the parent board C4 recognises code may not be specific for all group subsids

12 Section C Essential functions of the board and chair Chair responsible for leadership

13 Section D Board skills, renewal and review Substantial review and rewriting of this section Emphasis on skills needed to run a business Succession planning Kept max tenure of 9 years - but up to 9 years (flexible) More emphasis on terms of office and appraisal Re appointment after one term of office Proper induction and ongoing learning

14 Section D Board skills, renewal and review Provision D7 tries to address issue around direct nominations and election to a board D5- embeds diversity Appraisal of board members and committees now at least every two years Board payment independent advice is new

15 Section E Conduct of board and committee business Formal review at least every three years of governing instruments, standing orders, delegations, meetings but consider annually effectiveness Composition of sub committees

16 Section F Audit and Risk Reflects the importance of audit and business assurance Appropriate systems for business assurance Committee responsible for audit Board still has overall control unless specifically stared otherwise F9 review individual and combined risks Board has overall responsibility for Risk management

17 Section G Chief Executive Delegations of authority emphasised in main requirement G2 written and signed contract of employment which board considers whether a review is needed at least every three years G3 board approval for material payments and notice periods > 6 months

18 Section H Conduct, Probity and openness Combined section Maintain and be seen to maintain highest ethical standards of probity and conduct If members of more than one board in a group, formal arrangements to identify/manage any conflict Respond in a considered way to requests for info Strategy to communicate with stakeholders and get their views taking into account comms needs of diverse groups

19 Summary Section on diversity gone Good practice is separate section and more focussed Recognised the weaknesses in the LSVT model Emphasises the importance of a skilled rounded board Emphasises the fact that housing associations are complex businesses as well as charities It cannot guarantee good governance It provides stretch

20 Stephen Bull Head of Governance and company secretary