Why we are engaging with Grampian
We are engaging with Grampian 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 Grampian’s size and level of debt we consider it to be systemically important.
In November 2021 Grampian notified us that it had commissioned an independent internal audit into the Victoria Road School development. It also confirmed the auditor’s report highlighted an area of material non-compliance with the Regulatory Standards of Governance and Financial Management in relation to a procurement decision made in 2018. The report also made recommendations to strengthen the governing body’s oversight of development. Grampian completed a review of all of its recent development projects and confirmed to us that no other instances of non-compliance had occurred. Grampian also sent us its action plan to address the issues raised in the auditor’s report and confirmed that its action plan would be complete by February 2022.
Grampian is one of the larger developers of new affordable housing in Scotland and receives significant public subsidy to help achieve this. Grampian plans to develop new homes for social rent and mid-market rent.
What Grampian must do
- confirm when it has completed its action plan to review and update its procurement policy and to strengthen the governing body’s oversight of the development process;
- provide 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 changes to its development plans which might affect its financial position or reputation, in line with our notifiable events guidance.
What we will do
- engage with Grampian and monitor progress as it completes its action plan to strengthen its governance of the development process;
- review the minutes of the Board and audit committee meetings and liaise as necessary;
- meet with Grampian’s senior staff to discuss the impact of the pandemic on its existing business model and business plan and any risks to the organisation particularly in relation to its services to tenants; and
- update our published engagement plan in light of any material change to our planned engagement with Grampian.
Grampian 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.