A Liverpool-based housing association has been found non-compliant after the regulator found a “serious breakdown” in its governance and operations “at the most basic level”.
Eldonian Community Based Housing Association (Eldonian CBHA), which operates 394 units in Liverpool, was unable to show that it had an “appropriate, robust and prudent business planning, risk and control framework” in place, the Regulator of Social Housing (RSH) said.
As a result, it has been found non-compliant with the regulator’s Governance and Financial Viability Standard. This potentially puts tenants and social housing “at risk”, the regulator said.
The regulator first revealed last month that it was investigating the provider. The group’s stock consists of 346 general needs social housing units, 36 units of homes for older people and 12 units of local-cost homeownership.
As it has fewer than 1,000 homes, it does not have a current regulatory grading.
In today’s notice, the regulator said it received a copy of an independent report on Eldonian’s governance in April this year. However, the report was dated October 2020.
The report concluded that the association’s management committee did not understand its responsibilities, was not meeting the regulatory standards, and lacked capacity to address the issues, the regulator said. The association had not told the regulator about the report, according to the RSH.
Around the same time in April, the regulator said it received information that indicated there was no executive team at the organisation following the retirement of its chief executive and finance director. All but one of the management committee had also resigned, the regulator found.
“Through our investigations and information obtained, including our engagement with Eldonian CBHA, we have identified a serious breakdown in the governance, operations and control framework of the provider at the most basic level, which impacts upon the provider’s ability to operate effectively… potentially putting tenants and social housing at risk,” the regulatory notice said.
The group then moved to appoint a number of non-tenant members to its management committee, which is contrary to its constitution, the regulator said. Executive positions are now being covered by interim officers, the regulator said.
The notice added: “We… lack assurance that Eldonian CBHA is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence, and foresight. We also lack assurance that Eldonian CBHA is adequately managing its financial resources and any potential conflicts of interest.”
The fact that the association did not tell the regulator about the “significant weaknesses” in its leadership and management team was a fundamental failure of its governance arrangements and a breach of Part 2.7 of the Governance and Financial Viability Standard, the notice said.
Looking ahead, Eldonian has appointed consultants to senior management positions on an interim basis to assess its compliance.
The regulator added: “Eldonian CBHA has expressed its commitment to working with the regulator to address the issues raised in this notice.
“The regulator will continue to engage with Eldonian CBHA as it seeks to become compliant with the regulatory standards and will consider whether any further regulatory action is required.”
The group was established by tenants in 1983 as a housing co-operative and became a community-based housing association in 1990, according to its website.
In its last reported full-year, to the end of March 2020, Eldonian CBHA recorded a post-tax surplus of £536,397 off a turnover of around £2m. At the time of the filing, it employed 10 full-time staff.
Eldonian CBHA declined to comment.