Why we are engaging with BT Loch Aillse agus an Eilein Sgitheanaich Ltd (Lochalsh and Skye)
We are engaging with Lochalsh and Skye about its governance and stock quality.
In September 2022 we engaged with Lochalsh and Skye to clarify the status of its new Board members. Lochalsh and Skye commissioned expert advice to address our questions and in October 2022 it identified failings in its compliance with the Regulatory Standards of Governance and Financial Management. The failures related to Regulatory Standard 1, appointing Board members in compliance with its constitution, and Regulatory Standard 6, ensuring that any non-executive member seeking re-election after nine years’ continuous service demonstrates continued effectiveness.
Lochalsh and Skye’s Annual Assurance Statement submitted in October 2022 identified that it was not compliant with Regulatory Standards between May and August 2022. It stated Lochalsh and Skye considered it was now compliant having addressed the issues regarding its Board membership. It confirmed it had developed an action plan for improvement and commissioned an independent audit of governance relating to the areas of failure.
In March 2023 Lochalsh and Skye shared the independent audit report with us and confirmed it has accepted the audit findings and recommendations. The independent audit report identified further non-compliance with Regulatory Standards 1 and 6 and areas for improvement including weaknesses in Lochalsh and Skye’s governance and assurance processes.
Lochalsh and Skye provided its improvement plan to us in March 2023 setting out how it intends to address the improvement areas identified and achieve compliance with the Regulatory Standards.
We are engaging with Lochalsh and Skye to seek further information and assurance about the findings of the independent audit report and its proposed improvement action plan.
We are also engaging with Lochalsh and Skye to seek assurance about its approach to independently validating its stock survey information to support its business plan. The information was last independently reviewed in 2005. Lochalsh and Skye is completing an internal audit of the information and during 2023, it will commission an asset management expert to carry out a review.
What Lochalsh and Skye must do
In order to allow us to complete our review of its regulatory status Lochalsh and Skye must:
- provide us with the further information and assurance we require on the findings of its independent audit report and Lochalsh and Skye’s plans to address the findings of the report.
Lochalsh and Skye must also
- provide us with the details we have asked for regarding the audit and review of its stock survey information.
What we will do
To allow us to complete our review of Lochalsh and Skye’s regulatory status we will:
- review the information Lochalsh and Skye provides regarding the findings of the independent audit report and its plans to address this; and
- update Lochalsh and Skye’s regulatory status when we have completed our inquiries.
We will also
- consider the information Lochalsh and Skye provides regarding its audit and review of its stock condition survey information and engage as appropriate.
Regulatory returns
Lochalsh and Skye 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.