Why we are engaging with Blochairn Housing Association Ltd (Blochairn)
We are engaging with Blochairn about its governance and financial management.
Following an independent governance review, Blochairn identified a number of areas of non-compliance with the Regulatory Standards of Governance and Financial Management (Regulatory Standards).
The areas of non-compliance include business planning, risk management, the governing body’s understanding of its role and its effective control of decision making within the organisation, the quality of the information provided to the governing body, tenant and resident safety, internal audit and internal processes and policies.
Blochairn’s 2022 Annual Assurance Statement submitted in December identified areas of non-compliance with Regulatory Standards and confirmed it has developed an action plan to address this.
We are engaging with Blochairn to seek assurance about its compliance with regulatory requirements, including the Regulatory Standards, and about its capacity and capability to deliver the improvements required.
Blochairn has engaged openly and constructively with us. It has developed an improvement plan to address the issues, taken steps to increase the staffing capacity and is looking to co-opt new governing body members with governance knowledge. Blochairn currently does not have a business plan and is taking forward work to develop this and carry out a strategic options appraisal. It has taken external advice and support on procurement and maintenance.
Our current assessment is that Blochairn is working towards compliance with the Regulatory Standards of Governance and Financial Management. We set out below the information that Blochairn must provide in order to assure us that it can achieve compliance.
What Blochairn must do
Blochairn must:
- provide us with regular updates on its progress in implementing its Improvement Plan to address the weaknesses in its governance and compliance;
- keep us updated on any new areas of weakness identified;
- submit their strategic options appraisal once complete.
- send us by 30 June 2023:
- its approved business plan and updated risk register;
- 30 year financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flow complete with assumptions and explanatory narrative;
- a comparison of projected financial loan covenants against current covenant requirements;
- financial sensitivity analysis which considers the key risks, the mitigation strategies for these risks and a comparison of the resulting covenant calculations with the actual current covenant requirements;
- the report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance; and
- evidence of how it demonstrates affordability for its tenants.
What we will do
We will:
- assess the evidence Blochairn provides relating to its compliance with regulatory requirements, including Regulatory Standards;
- review its new business plan and financial projections, when developed;
- review the strategic options appraisal which Blochairn will share with us and liaise as necessary;
- review our engagement with Blochairn on an ongoing basis; and
- update our published engagement plan in light of any material change to our planned engagement with Blochairn.
Regulatory returns
Blochairn 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.