‘Consistently inaccurate’ data returns see provider downgraded

Origin

The ratings slide for Origin, following a reactive engagement by the regulator, relates to the quality of its regulatory returns.

The Regulator of Social Housing (RSH) noted that Origin’s data returns have been “consistently inaccurate over more than 12 months”, with errors relating primarily to the source and availability of future loan drawdowns.

This presented “a material risk to the regulator of misunderstanding the organisation’s actual financial position”.

As a result, the RSH “lack[s] assurance that Origin’s board has sufficient oversight and operates an appropriate, robust and prudent business planning, risk and control framework”.

It noted that the board has acknowledged that improvement is required and “has taken steps to address the issue in order to improve the quality of its data and oversight of its future returns”.

Origin Housing’s chief executive Carol Carter said: "This rating remains compliant with the regulatory standards and our financial position remains unchanged. Nevertheless, we will be working with the Regulator in the coming months to restore our G1 rating as swiftly as possible."

Origin added that steps had already been taken to strengthen it processes, and that it had appointed a new finance director, Gloria Yang, in December 2018 "who has substantial sector experience".

Salvation Army Housing Association

SAHA was downgraded following an in-depth assessment which found that it needs to improve some aspects of its governance to support continued compliance. This relates to a subsidiary, Chapter 1 Charity, which transferred its engagements to SAHA in September 2017.

Chapter 1 was at that point not compliant with the Governance and Financial Viability Standard, and SAHA has “delivered a significant programme of work to remodel and integrate Chapter 1’s assets and services within the business” and resolve its problems to ensure compliance.

The RSH stated that SAHA, having increased its focus on operational issues to achieve this, must now “strengthen its strategic oversight across the whole of the business”.

It also found that the financial contribution to SAHA’s services from its non-registered parent “continues to represent a material exposure which SAHA needs to manage to ensure compliance”.

While the management agreement has recently been renegotiated to provide “greater clarity and certainty for SAHA”, the RSH found that “the exposure remains as SAHA operates in low margin services and activities, leaving the business with limited capacity to manage unexpected adverse scenarios”.

Nigel Parrington, chief executive of SAHA, welcomed the regulator’s input, which he said “mirrors” the provider’s own internal review.

“In 2016 we took over Chapter 1 Charity Limited, which meant that more than 800 residents were transferred into our care. To ensure a smooth transition of service and maintain a high standard of care to our residents it was necessary to prioritise significant operational requirements,” he said.

“We’re pleased to be well under way with embedding our strategy and will continue to improve and deliver a high standard of service over the coming months.

He added: “We expect to be in a position again to achieve the highest grading from the regulator, as we have done previously.”

In other regulatory judgements published this morning homelessness charity St Mungo Community Housing (St Mungo’s) has been upgraded to the highest rating for governance, alongside Cambridgeshire-based Hundred Houses Society. Several other providers have had their existing grades confirmed.

Update: at 3.00pm, 24.04.19

This story was amended to include a response received from SAHA, which had previously been contacted for comment.