Why we are engaging with Charing Cross Housing Association Ltd (Charing Cross)
We are engaging with Charing Cross about its governance, financial management, tenant and resident safety and its planned transfer of engagements to West of Scotland Housing Association Ltd (West of Scotland).
Charing Cross carried out an independent review of its compliance with the Regulatory Standards of Governance and Financial Management (the Regulatory Standards). This was completed in September 2019. The review identified material non-compliance with the Regulatory Standards. Charing Cross did not take effective action to address its governance and financial management weaknesses which contributed to this non-compliance. We were not assured the governing body understood the seriousness of these weaknesses, and it failed to demonstrate a willingness and ability to take the actions needed to comply with Regulatory Standards.
We also engaged with Charing Cross regarding allegations relating to breaches of its Code of Conduct.
In December 2020 Charing Cross decided to implement a number of actions to address its weaknesses. At our request it co-opted four individuals to the governing body to improve its capacity and support it to make the necessary improvements. It agreed to develop its governance improvement plan to address the findings of the governance review and to carry out an independent investigation into the allegations regarding breaches of its Code of Conduct. It also agreed to take steps to address a number of other governance issues we raised with Charing Cross including its management of proxy voting at general meetings.
In May 2021 Charing Cross concluded a strategic options appraisal and decided it wished to seek a partnership with another RSL. It advertised for partners and following an evaluation process it decided a transfer of engagements to West of Scotland would be the best option to ensure it meets Regulatory Standards and to protect the interests of tenants and other service users. Charing Cross will now consult its tenants about a proposed transfer of engagements to West of Scotland.
The investigation into alleged Code of Conduct breaches found evidence of serious breaches of the Charing Cross’s Code of Conduct. Following consideration of the report two members of the governing body resigned. The findings of the report have raised further serious concerns about Charing Cross’s governance.
Charing Cross has taken action to try to address serious weaknesses in its management of proxy voting at general meetings including amending its constitution to improve the oversight of proxy votes.
Charing Cross carried out a review of procurement which identified serious weaknesses in its management of procurement. Charing Cross considered the findings and has confirmed given the range of weaknesses within the organisation it does not have capacity to develop and implement an improvement programme to address the findings. It is therefore relying on the support of its transfer partner, West of Scotland, to ensure it appropriately manages its procurement activity whilst it takes forward its transfer plans.
Charing Cross undertook a review of its compliance with its tenant and resident health and safety duties. This found non-compliance with its tenant and resident health and safety duties. Charing Cross developed an improvement plan to address the findings and with the support of its transfer partner is making good progress in addressing the weaknesses.
Charing Cross is now engaging openly and constructively with us as it takes forward action to address its weaknesses, including progressing its transfer proposals. It has made progress in identifying a wide range of historic governance, financial management and service issues and is taking appropriate action to try to address these, but the scale of the weaknesses identified is a matter of concern for us.
The Housing (Scotland) Act (2010) requires us to monitor and assess the financial well-being, governance and performance of each Registered Social Landlord (RSL).
Our current assessment is that Charing Cross is working towards compliance with the Regulatory Standards of Governance and Financial Management. We set out below the information that Charing Cross must provide in order to assure us that it can achieve compliance.
What Charing Cross must do
Charing Cross must:
- keep us informed about progress with its proposed transfer to West of Scotland and the outcome of its consultation with tenants;
- ensure that it meets statutory and regulatory requirements in relation to the proposed transfer of engagements particularly in relation to tenant consultation;
- implement its revised governance improvement plan;
- work openly and co-operatively with the co-opted governing body members;
- keep us informed about its progress in addressing the weaknesses in its management of its tenant and resident safety duties; and
- send us papers and minutes for its governing body meetings.
What we will do
- engage with Charing Cross about its plans to transfer its homes to West of Scotland to seek assurance tenants interests are protected;
- liaise as necessary to ensure it meets Regulatory Standards and tenants interests are protected;
- review Charing Cross’s progress in addressing the weaknesses in its management of its tenant and resident health and safety duties;
- keep our regulatory strategy under review and adjust it in response to emerging risks and issues; and
- update our published engagement plan in light of any material change to our planned engagement with Charing Cross.
Charing Cross 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.