Consumer Regulation Reforms: A glance at the Social Housing (Regulation) Bill draft clauses

Draft amendments to the Housing and Regeneration Act 2008 (HRA) were published last week. The amendments were in the form of ‘sample clauses’ and so the final form of the Social Housing (Regulation) Bill is still awaited, but as expected the proposals implement many of the reforms floated in the Social Housing White Paper: Charter for Social Housing Residents.

Here are five take-aways from the publication:

1. Two key themes arise: transparency and safety
   

   These are encapsulated in the proposed amendments to the Regulator of Social Housing’s fundamental objectives: to support the provision of housing that is ‘safe’ and a requirement for registered providers to be transparent with their tenants.

The new provisions will enable the Regulator to set standards around the provision of information and transparency, including:

• A new ‘Access to Information’ Scheme.
• Provision of information to residents based on financial metrics relating to how much providers are spending on management costs and executive remuneration and how income is being spent.
• A requirement for providers to publish information and analysis relating to their compliance with the regulatory standards – how the information is collected, analysed and published.
• Enabling the Regulator to direct providers to collect, process and publish information concerning their performance (which may apply differently to different RPs) – implementing the Tenant Satisfaction Measures.
• Introduction of the ‘look through power’ first floated in the White Paper – broadening out the circumstances in which the Regulator can request information from third parties to enable it to follow information relating to funds or assets once they have left the regulated sector. A failure to provide the information, or provision of false or misleading information, will be an offence. This is specifically aimed at tackling fraud or misuse of sector funds and will enhance the effectiveness of the regulation of the economic standards.

Whilst there are still questions to be answered here, including how the Access to Information Scheme will work, providers should start thinking now about how they will collate and disseminate this information – and review processes that are already in place relating to e.g. subject access requests. 

2. Say goodbye to the ‘serious detriment’ test
   

   No surprises here – the draft clauses enable the Regulator to use its monitoring and enforcement powers in relation to the consumer standards without the need to meet the serious detriment test. The Regulator must still exercise its functions in a way that is proportionate and minimises interference, and this change brings consumer regulation on par with economic regulation on a proactive rather than reactive basis.

The Regulator will have the power to produce a code of practice to sit alongside the consumer standards. Similar to the codes of practice relating to the economic standards, compliance will not be mandatory but it will give an example of best practice (‘amplifying’ the standards). 

3. An added layer of health and safety regulation

   Providers will be required to nominate an individual to act as Health and Safety Lead, who will be responsible for monitoring compliance and advising the board as to how they should address risks. The proposals set out various factors to be considered when determining whether an individual is suitable to be appointed as Health and Safety Lead, and providers must notify the Regulator of, and publish, the appointment.

Providers should begin to consider who the lead could be within their organisation. Whilst these reforms don’t change existing health and safety obligations, it is clear that this individual will carry a huge amount of responsibility in an area with a skills gap and so this may require additional training and investment for existing employees. 

4. A more joined up approach informed by lived experience

   The provisions require the Regulator to set up an Advisory Panel which includes those that the Regulator views as representing the interests of lenders, local authorities, tenants and landlords (as well as representatives from the Great London Authority, Homes and Communities Agency and the Secretary of State). The role of the panel is intended to inform the Regulator on a ‘wide range of matters’ – including key sector issues and risks.

This is clearly intended to put the voice of the customer at the heart of regulation alongside those operating ‘on the ground’; the panel will be empowered to proactively raise issues and will be central to formulation of the new consumer standards.

The provisions requiring the Regulator and Housing Ombudsman to co-operate are supplemented by a fact sheet. Consultation requirements relating to changes to the respective remits of each organisation are also introduced (closing a gap in the current legislation). 

5. The reforms have (some) teeth

   So far it has been unclear what the consequences of poor performance might be. The idea of a ‘name and shame’ was originally floated in the Social Housing Green Paper and this appears to be a fundamental pillar of the proposals – those failing to comply with the consumer standards or who are subject to the Housing Ombudsman’s most serious finding (serious maladministration) will be named on the government’s website and across social media channels.

The clauses also introduce:

• Performance Improvement Plans or ‘PIPs’ – very much bridging the gap between the current use of voluntary undertakings by the Regulator and the use of other enforcement powers. PIPs will relate to breaches of the consumer and economic standards, or where providers have failed to comply with transparency requirements. Tenants can request copies of PIPs and, where there is a failure to comply, compensation may be payable to those who suffer as a result.
• Removal of the cap on fines for non-compliance (so they are now unlimited).
• The right for the Regulator to undertake surveys on properties directly (including the power to obtain warrants for access).
• Widening enforcement powers relating to registered charity, local authority and for-profit providers.
• Increased powers for the Regulator to remove officers of providers, where encountering unreasonable resistance.

Gaps that have existed for over a decade are now being closed within the legislation. Whilst the publication is a step in the right direction, it is hopefully also a signal that the pace of change will pick up now that we are already three and a half years on from the Social Housing Green Paper.