Opinion: The time for change
Published by Max Salsbury for 24dash.com in Housing
Opinion: The time for change
John Cross, director, John Cross Consulting Ltd
With England’s early exit from the World Cup, the cricket team losing to Sri Lanka and then Andy Murray’s departure from Wimbledon before the final we have already had a summer of dissapointment. I’ve got a more surprising one to add to the list – the decision by the HCA to defer charging fees until at least April 2016.
I have previously declared my conditional support for the introduction of fees as part of the strengthening of the HCA regulation function. Now that we have seen the outcomes from Altair’s review of the Cosmopolitan case and the HCA’s consultation draft for the changes to the regulatory framework I remain ever more convinced that we need a strengthened independent regulator that is properly resourced.
The changes that are proposed in the consultation document are generally sensible although I am not a fan of introducing a code of practice to “explain and elaborate on the content of the (regulatory) Standard. The danger is that the code becomes a tick box for the sector to show the regulator compliance.
In our increasing complex operating environment we need to demonstrate the highest standards of governance. The governance standard is the critical element of the regulatory framework. Properly controlled and well governed businesses don’t tend to fail.
Good governance is the heart and soul of successful organisations. It is not just about complying with standards that the regulator sets it is about the board setting its own rigorous standards. That is what I believe co-regulation to be about. It is a much more challenging relationship between the regulated and the regulator.
Delivering the excellence in governance is not a quick win that the sector can deliver over-night. I do believe that we can get there quicker if we had a more sophisticated regulator and regulation in place. This is not a cheap shot at Julian Ashby, Matthew Bailes and the team as they are trying to deliver a huge ask with the Government austerity arm firmly up their back. There are many good people at the HCA but we are in new territory and I think the skills, experience and knowledge needed by the regulation teams needs overhauling in a strategic way.
As our business models become more varied, the sector continues to take diverse paths and our risk profiles more complex we need the regulator to be capable of being able to spot the early signs of a problem or to ask the difficult questions of the board and the executive. The changes the HCA introduced in 2013 bringing in new higher level skills is already bearing fruit but that is only part of equation.
Without this radical and strategic overhaul it is almost inevitable that the HCA will have to continue to tinker with the standard, with the code of practice so that it can be implemented by the HCA’s key resource, its people.
I cant see Eric and George loosening the purse strings around the regulation function staffing budget. That is why I am disappointed by the news that we are such a way off introducing fees as it was my hope that with fees there may also be some more freedom for the HCA to do what we most need from it – to be the best regulator it can be. To do that we need the right people in the right roles not codes of practice.