HCA responds to Committee's criticism
Published by Max Salsbury for 24dash.com in Central Government and also in Housing, Regulation
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The Homes and Communities Agency (HCA) has responded to criticism of its practices by the Communities and Local Government Committee, claiming that it is "entirely focused on meeting its statutory objectives on economic and consumer regulation set out by parliament".
In a report published yesterday, the Committee slammed the HCA's use of governance ratings to signal concerns about financial viability and demanded it started publishing accurate financial viability ratings instead.
In its defence, the Agency has said that if a housing association is failing on viability or governance then it will "make this clear in a timely and transparent way".
The HCA said: "Where a provider does not meet either our governance or viability standard, we will say so. But in the light of the select Committee’s comments, we will alter our description of a grade three viability judgement to make it clear that we regard a non-compliant viability judgement as a very serious issue rather than just a concern."
The Committee drew attention to the HCA's reaction to the situation at Cosmopolitan Housing Group, which came close to insolvency in 2012. Committee chair Clive Betts MP said that "the eventual downgrading of Cosmopolitan amounted to a futile exercise in locking the stable door long after the horse had bolted. It exposed the serious shortcomings of the system."
In response, the Agency said it had "helped to identify and successfully resolve complex issues at Cosmopolitan Housing Group. The Select Committee has highlighted the time it took to publish a regulatory judgement on the Group. Serious problems emerged at the Group shortly after the Regulation Committee took responsibility for regulation, and in a period in which the new Committee was considering the approach to, and format of, future judgements.
"The Cosmopolitan judgement was published in the first set of judgements – in a revised format - issued by the HCA. We are now publishing judgements on a regular monthly cycle which means there should be no such delay in future. We are committed to learning lessons for all in the sector from the Cosmopolitan case, and we will make an announcement on the approach we have agreed with DCLG shortly."
The Agency said that, following discussions with lenders and other stakeholders, it has also agreed that where it believes its existing judgement may be subject to significant downward revision it will "make it clear that the relevant provider is under review".
The HCA added: "Our role on consumer regulation changed under the Localism Act 2011. The regulator now sets consumer standards and has powers to intervene where those standards have been breached and the breach has or could give rise to serious harm to tenants.
"We will publish a review of our first years’ experience of this new role in the autumn. We welcome the Select Committee recommendation that further work is undertaken to clarify our role, and in particular to explain that the Regulator’s role pertains to breaches of its standards and that a separate system exists to handle complaints."