Why we are engaging with Albyn Housing Society Ltd (Albyn)
We are engaging with Albyn about its governance and because it is a systemically important landlord.
COVID-19 has significantly impacted the services provided by social landlords. We will continue to monitor, assess and report upon how each landlord is responding and we will keep our regulatory engagement under review so that we can continue to respond to the challenges of COVID-19.
We refer to a small number of RSLs as systemically important because of their stock size, turnover or level of debt or because of their significance within their area of operation. We need to maintain a comprehensive understanding of how their business models operate, and how they manage the risks they face and the impact these may have. So we seek some additional assurance each year through our engagement plans. Given Albyn's level of debt we consider it to be systemically important.
We have been engaging with Albyn over the last two years regarding its management and governance of changes at Board and operational level and its related business change programme. From this engagement we are seeking assurance about compliance with our Regulatory Standards of Governance and Financial Management.
The Board has now concluded an investigation into anonymous complaints, in part related to the management and oversight of the change programme. There were no findings upheld from this investigation, however a separate review was commissioned to review and support its governance, including a risk review and a Health and Safety audit. The Board has prepared a substantial action plan to address weaknesses identified as part of this governance review. We will monitor the implementation of this plan. We need assurance about the Board's understanding of its roles and responsibilities including the risks to tenants' interests of Albyn failing to meet its obligations as an employer. The Board is currently working to give us assurance about its governance arrangements and members' capacity to progress these issues.
To support this work the Board has been strengthened by three experienced cooptions and one of these new members will take up the Chair's post in January 2022. Albyn has also recruited a Director of Governance and Business Improvement for two years to help progress the action plan.
Both the Chair and Chief Executive resigned in August and Albyn is therefore carrying out a strategic options appraisal. The Director of Customer Services has been appointed as Interim Chief Executive until June 2022 and a further interim appointment has been made to the Director of Customer Services post until June 2022. There is therefore a full Leadership Team in place providing support to the Board.
We are engaging with Albyn to monitor progress with its action plan and the longer term change programme. Both the Board and the Leadership Team are working openly and constructively with us as they take forward this work.
What Albyn must do
In order to allow us to complete our review of its regulatory status Albyn must:
- update us monthly on progress with its action plan;
- demonstrate continuing commitment to delivering the action plan as timetabled and effectively managing the associated risks; and
- evidence effective Board development and training actions including maintaining positive working relationships with the Leadership Team; and provide us with supporting evidence to confirm that actions are embedded.
Albyn must also:
- keep us informed at key stages of the recruitment of the Director of Governance and Business Improvement;
- provide us with its strategic options appraisal by 28 February 2022;
- provide us with copies of its Board and audit committee minutes as they become available; and
- ensure that the impact of the pandemic on its development plans is reflected in its business plan and tell us if there are any material adverse changes to its development plans which might affect its financial position or reputation, in line with our notifiable events guidance.
What we will do
- consider evidence to support completion of key areas of the action plan;
- meet the Leadership Team monthly to discuss progress with the options appraisal, governance and risk reviews and the overall business improvement action plan; the impact of the pandemic on its existing business model and business plan; and any risks to the organisation particularly in relation to its service to tenants;
- meet the Board quarterly to discuss progress with the action plan;
- liaise with Albyn regarding the investigation process and action plan;
- review the minutes of the Board and audit committee meetings and liaise as necessary; and
- update Albyn’s regulatory status when we have completed our inquiries.
Albyn must provide us with the following annual regulatory returns and alert us to notifiable events as appropriate:
- Annual Assurance Statement;
- audited financial statements and external auditor's management letter;
- loan portfolio return;
- five year financial projections; and
- Annual Return on the Charter.
It should also notify us of any material changes to its Annual Assurance Statement, and any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns.