A response from the Irish Council for Social Housing to Building for the Future: A Voluntary Regulation Code for Approved Housing Bodies in Ireland

Transcription

1 A response from the Irish Council for Social Housing to Building for the Future: A Voluntary Regulation Code for Approved Housing Bodies in Ireland 27 th September Introduction 1.1 As the national representative federation, the ICSH welcomes the opportunity to respond to the consultation document Building for the Future the aim of which is to provide a basis for a statutory regulatory environment for the sector. 1.2 The ICSH supports the introduction of the voluntary code which provides an important opportunity for Approved Housing Bodies (AHBs) to move towards a robust and transparent regulatory regime and this is a key first step in the process. 1.3 The housing association sector manages over 27,000 homes and has been growing significantly over the past ten years. Housing associations traditionally played a complementary role to local authorities however the Government Housing Policy statement (2011) now places the sector at the heart of the Government s vision for housing provision. Effective and appropriate regulation of housing associations will assist them to fulfil this enhanced role. 1.4 Housing Associations have a strong and successful track record of providing housing and are distinctive in that they are founded upon the principle of voluntarism, which lies at the heart of the sector. 1.5 It is important to acknowledge the context within which this new regulatory code is being introduced. Cuts to capital grants, the use of private finance and the Residential Tenancies Act are just some of the challenges facing housing associations. These organisations are evolving to meet these challenges and it is crucial that housing associations are facilitated to respond to the changing environment. 1.6 The ICSH represents a wide number of organisations providing housing and services to different groups in a variety of different settings. There are wide ranging viewpoints and issues raised in response to the consultation document. 1.7 Since the publication of the code, the ICSH have discussed these issues in detail with members and convened a Working Group on Regulation. This response reflects those discussions and has been agreed by the ICSH Board of Management 1

2 2. General comments 2.1 The ICSH views Building for the Future purely as a preliminary consultation document. The feedback from the consultation process should provide the basis for the document to be re-worked into a more user friendly guide which would be more explicit in terms of: The key expectations and requirements for each tier of AHBs; The process of regulation including who will regulate? Consequences of noncompliance and non-participation; Supports, training and resources available to ensure an enabling transition period for AHBs. 2.2 Overall the ICSH feel that the document lacked clarity and was too focussed on larger AHBs and housing development. The inference throughout the document that only large AHBs will use loan finance does not reflect what is happening within the sector. 2.3 It does not adequately address the common objective of all AHBs, regardless of size, which is the on-going provision of good quality housing and housing management services for tenants. 2.4 The code lacks any specific requirements on ethics within the sector which is at the core of good governance. Ethical issues including accountability, diversity and transparency should be more adequately addressed in the code relating to practices, probity and Boards of AHBs. 2.5 It is important to acknowledge in the code that regulation is not a substitute for governance but will enhance governance practices already practiced within the sector. 2.6 A total of 84% of ICSH members manage 50 or less units of accommodation. This strong voluntary ethos has contributed to the success of the sector and it is important to recognise the strong voluntary effort which underpins the sector in Ireland. 3. Section 1: Key features of the Voluntary Code 3.1 Do you agree that these principles should underpin the regulatory framework? The code proposes three key guiding principles to underpin the framework. The ICSH broadly agrees with the proposed principles however further detail is required to outline how the stated principles relate specifically to the sector and how they will be applied. 3.2 Proportionality The ICSH agrees that the code should be proportionate to the operating activity of the organisation. The code should be applied in a proportionate way as opposed to proportionality being a principle. Whilst different information will be required for different 2

3 tiers, all AHBs should be able to demonstrate that they are well run and focussed on the needs of their tenants. 3.3 There are a number of core principles that apply to all AHBs regardless of how they fit into to the proposed tiers including ethical issues, adhering to agreed standards for tenants and reporting on performance standards. 3.4 Transparency The principle of transparency should extend to all stakeholders involved in the voluntary code, not only AHBs. There should be clear and consistent processes set out for all stakeholders and the intended role of each including the D/ECLG, Housing and Sustainable Communities Agency (HSCA) and Local Authorities explained. 3.5 Should additional principles underpin the framework? All AHBs have the common objective of addressing social housing need for those who cannot provide their own home. The ICSH is concerned that the consultation document does not provide sufficient detail on tenant services and standards which should be the driver for maintaining agreed standards across the sector. 3.6 An objective of the voluntary code should be to ensure that tenants have good quality homes and receive high quality housing services. Quality of service and housing standards therefore should be a guiding principle and a base for all tiers. Tenants should be at the heart of the code this key principle should be added to reflect this. 3.7 The principle of consistency should underpin the framework. A driver for the Green Memorandum in 2002 was to address inconsistencies for voluntary housing associations. There is a strong responsibility on the part of the regulator and other bodies involved to ensure a consistent approach in a complex system. 3.8 An additional principle for inclusion is sustainability. The activities of AHBs should contribute to the creation of housing and communities that are environmentally, socially and economically sustainable. This principle would underpin the sustainability of the sector over the long term. 3.8 Do you agree with this classification? The ICSH broadly agrees with the proposed organisational classification. In general the tiered approach is reflective of the sector and a useful starting point. Adequate flexibility should be built in so the tiers are not rigidly fixed on units or employee numbers. The classification should have a risk- based approach which would provide a basis for each tier. For those bodies who are considered to be taking on more risk e.g. those providing care, additional reporting will be required by these AHBs. There are a number of issues with the descriptions of each tier. 3

4 3.9 The definition of Tier 1 automatically assumes that AHBs with less than 50 units have no intention of developing further. It does not capture small AHBs with development plans. The tiers should be amended to reflect the small AHBs with scope and intentions to develop and expand in the future Some Tier 1 AHBs have a small number of units but would employ a significant number of support staff. The number of employees should be specified The ICSH believe AHBs should be given the option to self-select into an appropriate tier or to opt-in to a tier should the AHB wish to provide a higher level of reporting e.g. from Tier 2 to Tier Housing and Support / Care Services Many AHBs across all three tiers receive funding from the HSE for the provision of support services for the elderly, homeless and people with disabilities and have entered into Service Level Agreements (SLAs). These SLAs involve reporting requirements and due regard should be made to these arrangements within the code in order to avoid unnecessary duplication The ICSH believe that a reciprocal arrangement should be sought between the HSE and the regulating body. This arrangement was proposed in the context of the Charities Regulator who could seek relevant information from the CRO on charitable organisations to avoid duplication. 4. Section 2. What will be required from AHBS? 4.1 Do you think that these requirements are proportionate? Do you think they are the right requirements? Are there any additional requirements that you would like to suggest? Charter of Commitments This section should be revised in the context of the comments above. It is disappointing that the Charter makes no reference to Governance. There are key requirements for all AHBs regardless of their size or which tier they opt into. The ICSH suggest that this section should be redrafted to incorporated existing requirements for AHBs including those in the Green Memorandum VHU/02. It should emphasise that for the majority of AHBs this information will have already been prepared e.g. annual returns / reports, information required for the Housing Finance Agency, Banks etc.. Applying the principle of comply or explain would give the opportunity to AHBs to meet a particular standard, explain why this is so and what steps the AHB is taking to achieve compliance and meet standards in the future. 4

5 4.2 Board Term Limits One of the most controversial aspects of the proposed voluntary code is the is the proposed imposition of a limit of service on a Board member ( none serving more than two consecutive five year terms ). The level of concern to this proposal highlights the commitment of Board members in the sector. 4.3 This has the potential to cause significant disruption across the sector at a time when experienced and committed Board members are vital to maintain stability in the governance of AHBs particularly in this time of change. 4.4 AHBs may have to make changes in the articles of association with EGMs required to implement this change. It would also create difficultly to meet the requirement for five Board members. 4.5 Whilst the ICSH accept that the Boards of AHBs should be revitalised and refreshed, it is equally important that governing bodies have a level of continuity and retain the culture and organisational memory of the organisation. 4.6 Like many other charitable organisations relying on voluntary board members, it is increasingly difficult to recruit and retain Board members with the appropriate skills and commitment. Imposing these term limits is neither practical nor appropriate at this time. The ICSH urge the D/ECLG to withdraw the proposed limit and replace with the requirement that AHBs demonstrate that they review their governing body on a regular basis, undertake appropriate training and aim to replace a percentage of the Board. There should be a realistic where AHBs can assess what they are doing to progress these commitments. 4.7 Role of HAPM The voluntary code should be based on a set of agreed performance standards in key areas including governance and financial management and housing management and tenant services. Since 2005, the ICSH have been developing Housing Association Performance Management (HAPM) and have been supporting AHBs to make these returns and benchmark their performance in key areas. The existing HAPM framework incorporates many aspects of Tenant Services outlined in the code. 4.8 The role of HAPM should be made more explicit in relation to the code. An abridged version of HAPM has been developed for Tier 1 AHBs. 5

6 5. Requirements under the Charter of Commitments 5.1 Audit Committee (Tier 2) There is a lack of clarity is in relation to the terms of reference for an audit committee for Tier 2 as well as criteria for inclusion of two non-executive directors. The establishment of an Audit committee for some Tier 2 and small developing AHBs would be onerous where they only have board of directors with no subcommittee structure. 5.2 Boards should have a subcommittee structure which is commeasurate with the scale of their operations to ensure effective governance and risk management. The Charter of Commitments only makes reference to an audit subcommittee. 5.3 Tenants Services and Performance Management Indicators (Tier 3) The current requirements allow for Tenants Services and Performance Management Indicators applicable only to Tier 3. The ICSH would question why this would not apply to all AHBs. We suggest that HAPM would apply to all AHBs (with the abridged version available for smaller AHBs). Additionally, smaller AHBs could work towards the Tenant Services Commitment with ICSH support and training. 5.4 Financial Plan (Tier 3) We are concerned that the requirements of the financial plan do not reflect HFA requirements. This should be extended to a five year financial plan which is the minimum required by the HFA. 6. Section 3. How will the Voluntary Code be managed? 6.1 Does the outlined approach to regulation under the code seem reasonable? In order to fully respond, further information is required on what the process will entail and how it will be managed. The approach should not become a barrier for small, specialist or community based, volunteer led AHBs. They perform a vital role in local communities and are an important support to vulnerable persons across the country. 6.2 The approach to regulation should be to promote improvement and learning. During the transition phase, AHBs should be supported and resourced to make improvements and undertake training where required. 6.3 In the same way that AHBs are expected to improve, in the transition phase, the approach to regulation should also be monitored and reviewed. 6

7 7. Who should regulate? 7.1 The code makes reference to the Department of Environment, Community and Local Government (D/ECLG) and the Housing and Sustainable Communities Agency (HSCA). It is unclear who will carry out the regulatory function. 7.2 The Minister for Housing Jan O Sullivan T.D acknowledges the need for a robust and transparent regulatory regime that will provide independent validation of the sectors performance to independent stakeholders. The ICSH agreed that on balance that the regulator should be an independent body. One of the objectives of the regulatory code is to provide assurance to tenants, Boards, Government and potential investors and this can only be achieved if the regulator is seen as truly independent. The most relevant structure would be a body completely separate and independent to the development functions of the current HSCA but may be a part of the wider HSCA structure in the future. 7.3 Should the regulatory function be incorporated into HSCA, separate structures will be required which would demonstrate clear operational and governance independence. 7.4 The ICSH Board believe that the Property Services Regulatory Authority (PSRA) already have a wide remit and situating the regulatory role within this body would be a small part of their work within an organisation that has no history or understanding of the voluntary housing sector. 7.5 What role should Local Authorities have in the longer term statutory regulatory framework? Local authorities should have a general strategic and enabling role in social housing however involvement in the statutory regulatory framework raises serious concerns. AHBs have existing working relationships with local authorities either on an individual basis or working across a number of local authorities. Having local authorities involved in the statutory regulatory framework would not be appropriate. 7.6 Local authorities are linked in with many of the key functions for AHB and having an additional role in regulation would create conflicts of interest for housing staff with links to AHBs. A central independent body, which would be politically independent, should play the lead role in regulation of the sector. AHBs would send the returns to this central body and the regulator could link with local authorities as with other stakeholders where AHBs are developing and managing in their area. 7.7 Representatives from Local authorities could also be involved in an oversight Board along with other stakeholders such as the D/ECLG, ICSH, Tenants and Financial Institutions. This would relate the code back to whom it is intended to provide reassurance for. 7.8 Consistency of approach The intended role of local authorities should be clearly outlined and controlled. In the past various interpretations on specific issues have led to difficulties for AHB. 7

8 7.9 Consequences of non-registration or non-compliance There is a lack of clarity in relation to enforcement of the code and implications for those AHBs who do not sign up or who do not meet the requirements of the code. Due regard should be made to the existing regulatory provisions that AHBs must already comply e.g. through the Green Memorandum and to other bodies for e.g. CRO, Revenue Commissioners etc To what extent should the outcomes of AHB assessments under the code be publicised? The ICSH broadly agree with information being made available to stakeholders. This should only be undertaken after an appropriate lead in time to allow AHBs to embed the voluntary code into their organisations The outcomes of the assessments should be used as a learning tool for AHBs. An enabling approach should be taken in an instance where AHBs do not comply or are required to make improvement a set of actions should be recommended to the AHB AHBs should have the opportunity to respond to reports and create an action plan which demonstrates commitment to improve any areas identified The ICSH can play a role in continuous improvement and improvement planning as well as illustrating examples of good practice in the sector In the short term, how best can interaction between AHBs and the Local Authority system be structured? The ICSH can play an enabling role as it has done at regional and county meetings between the D/ECLG and AHBs which also involved the local authorities in many areas. This existing framework, with a more central role for local authorities would facilitate structured interaction between local authorities and AHBs Do you have any views at this stage regarding how the regulatory system should be funded? The ICSH believe that the regulatory system should be funded by Government. There is widespread concern in the sector that the costs of regulatory compliance will place an additional administrative burden particularly on smaller AHBs with no employees Are there other measures that could boost engagement with the code? Further engagement and consultation with D/ECLG and HSCA is required to enhance an understanding of the detail, implications and benefits of the code for AHBs and their tenants The introduction of a timeline for implementation of the code, key milestones etc will assist engagement from the consultation phase through to the full mandatory framework,. 8

9 7.16 The ICSH could assist with engagement and facilitate practical learning in the initial phase of the code. For those AHBs who do not have good governance practices in place, support and training will be required to ensure that they are given the opportunity to address these issues. 8. Are there other regulatory powers that would be appropriate under the code? 8.1 The ICSH urges further discussion on this element of the consultation. There will be significant learning from the initial implementation phase of the code. 8.2 The code should act as an enabling process and all reasonable support should be exhausted before punitive action is taken. 8.3 Key areas for which require further analysis before inclusion in the longer term statutory framework include step in powers, rescinding approved status, interventions on boards, carrying out investigations, following up complaints, sanctions for non-compliance etc. 9. What types of training and supports do you think AHBs will require in order to comply with the code? 9.1 Tailored professional training programmes are required on a range of areas including but not limited to: Strategic planning Producing annual reports Good Governance Role of Officers Implementation of policies and procedures Financial management Business planning 9.2 Smaller AHBs will require administrative support to enable them to collate information and make the required returns as well as ensure that standards are being maintained e.g. HAPM (abridged version). 9.3 The ICSH currently plays a significant role in building capacity and providing training and support to AHBs in key areas. The ICSH could further develop its CPD and training portfolio which would provide learning and support which could build on that provided to all AHBs to date. 9

10 10. Section 4 Appendix Supporting Documentation Do you have any specific comments on the proposed content? 10.1 The supporting documentation is not linked to the proposed requirements of each tier through the Charter of Commitments Annual report and accounts The existing format of Annual reports and accounts should be used. The code seeks three year accounts which runs contrary to the current format which is to compare the last two years. Expanding this would add additional expense and administration Performance standards and Key Performance Indicators (KPIs) are required which AHBs could follow Membership of Management Board See previous note in relation to the term limits for Board Members. The ICSH recommend that a Board of Directors is made up of around 7 members (but no less than 5 members) and therefore no more than two members of the Board could be ordinarily resident outside the state. It would be useful to provide further clarification on ordinary residents of Board Members in this section Gender Balance The ICSH suggest that all ethical and equal opportunity areas should be considered in the make of a Board, not just gender. AHBs should be facilitated to aspire to these guidelines for best practice on Board composition over time Audit Committee The focus on the audit committee is out of balance with no reference to the role and functions of a Finance committee. Some of the items under the remit of the Audit Committee could also be applicable to the Board or properly constituted Finance committee Tenant Services Commitment Checklist This section should be linked to the Charter of Commitments and requirements for AHBs. It should be made explicit within the code whether this commitment checklist applies to all of the tiers as it is only reference for tier 3. The requirement for a pre tenancy course should take account of those with special needs and it should therefore be specified where appropriate to tenant needs. 11. Summary 11.1 The ICSH and its members welcome the introduction of the voluntary code and acknowledge the benefits for the sector. Many of the elements of the code are already part of governance for many AHBs and members simply require appropriate support, training and resources (for smaller AHBs with no staff) to enable them to fully comply with the code. 10

11 11.2 The ICSH have been engaging with members since the publication of the code in August in order to arrive at a consensus on the key areas of concern. Our members have also been encouraged to submit their responses directly to the D/ECLG which contain additional commentary, feedback and suggestions The ICSH are committed to providing ongoing support to its members to enable them to implement the code The ICSH view this as the first step in the introduction of a regulatory process for AHBs in Ireland. We look forward to further consultation with the D/ECLG and further opportunities to comment on the code as the regulatory framework develops The ICSH Working Group on Regulation and Governance welcome the opportunity to provide further detail on information for the annual return, the Charter of Commitments and future regulatory powers as it continues to provide support. For further information, please contact Donal McManus, Executive Director, ICSH or Kathleen McKillion, Head of Development 11

12 Appendix 1 - ICSH Regulation and Governance Working Group The role of the ICSH Regulation and Governance Working Group is to assist the work of the Management and Development and Special Needs Housing and Support Services Sub- Committees and the ICSH elected Management Board with more detailed aspects of regulation and governance policy making. The remit of the Working Group was to examine the Department s draft consultation document, Building for the Future, A Voluntary Regulation Code for Approved Housing Bodies in Ireland and to draft a submission. The draft submission was considered by the Sub Committees at the 12 September meetings and by the Management Board at its 19 September meeting. The Working Group members consist of members of ICSH Management and Development Sub Committee, the Special Needs Housing and Support Services Sub Committee, ICSH Board of Management, and voluntary Board Member representatives. The Secretariat for the working group is Kathleen McKillion, Head of Development and Caren Gallagher, Projects Officer. 12