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Learning the lessons of regulatory downgrades

What can we learn from the recent crop of regulatory downgrades? Phil Morgan takes a look


THREE years ago, prompted by the VFM downgrades, I published the first version of Learning from Regulatory Downgrades. This sought to capture themes in the downgrades issued by the Regulator and use direct quotes from the judgments. Since then I’ve updated the publication annually. So what is new in the 2017 version?

Firstly hubris – or the “we know best” – mentality continues to be at the source of the most severe downgrades. These downgrades cover multiple issues: not notifying the regulator when things go wrong, not complying with Codes of Governance, poor quality information to Boards and weak Board challenge. I continue to see advocates for ignoring the nine-year rule for Board members. Based on these downgrades there continues to be a strong correlation between breaking the nine-year rule and the hubris that causes other systemic failures in governance.

Secondly risk and internal controls continue to be key issues and ensuring that these are up to date and appropriate are critical for Board Members in ensuring that the business of associations are well run.

Thirdly consumer safety, even with the unduly high ‘serious detriment’ bar, continues to task the Regulator. Most of the resulting downgrades feature health and safety in some guise although the one case of successive downgrades for a particularly poor repairs and maintenance service shows that the Regulator can, and will, go further in its core role of protecting tenants. This case has also highlighted issues concerning the relationship between the Housing Ombudsman and the Regulator (which I initiated some seven years ago). Clearly when there are repeated complaints which show systemic weaknesses in a landlord these have to be shared between the two. 

One other issue of concern for the Regulator concerns reassurance about improvements. Two of the downgrades followed previous upgrades when the landlord had given assurances to the Regulator that the issues of concern have improved. Clearly this was not the case and the Regulator will have to take more care in ensuring that upgrades are evidenced and merited.

The reports themselves are mines of useful information for any forward thinking Executive and Board Member. You can always read the full reports via the HCA website.

Alternatively my report summarising the key points is available at HERE.


Phil Morgan is a leading authority in tenant and resident involvement and works as a consultant, commentator and speaker

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