Company Secretary Snapshot - May 2023

Welcome to our snapshot of key changes and current affairs for Company Secretaries working in social housing.

This month we’re looking at the Economic Crime and Corporate Transparency Bill, the latest Housing Ombudsman report and more!

Economic Crime and Corporate Transparency Bill: committee stage in House of Lords completed (corporate aspects)

On 11 May 2023, the Economic Crime and Corporate Transparency Bill completed its committee stage in the House of Lords. An amended version of the Bill has been published and the key changes can be summarised as follows:

• Failure to prevent fraud offence – a new “fraud offence” has been added to the Bill and includes false accounting and false statements by company directors, fraudulent trading, fraud, participating in fraudulent business carried on by sole trader and obtaining services dishonestly. An organisation is guilty of an offence if a person associated with the organisation commits a fraud offence intended to benefit it or a person to whom the associate provides services on its behalf.
• Director disqualification – there are various consequential amendments made to the Bill and other legislation including a director disqualification sanction.
• Register of members – a new duty is to be introduced on members to notify, and notify changes to, the required information (the forename and surname of an individual; the corporate/firm name and a service address for corporate members and firms). Companies can also require that information be provided – failure to comply or making false statements are offences.

Stay tuned for more updates on this as the Bill makes it way to the report stage for further scrutiny.

The Housing Ombudsman – On the record: Spotlight on Knowledge and Information Management

The Housing Ombudsman (HO) has issued its latest Spotlight Report, this time on Knowledge and Information Management.

The report looks at governance, repairs and recording standards, having reviewed these issues within the HO’s casework. The HO found that about two thirds of the cases upheld had an issue with the availability of data and information.

The HO made a call for evidence before issuing the report and noted the following findings:

• 56% of respondents having issues accessing or being provided with records in order to respond to complaints;
• 82% of those saying it impacts their ability to fully address complaints.

The HO makes 21 recommendations relating to Knowledge and Information Management, including:

• Implement a Knowledge and Information Management Strategy – this should include defining what Knowledge and Information Management is, an implementation of an Information Asset Register and how this strategy will align with the overall business strategy and the need for continuous service improvement.
• Train staff on the requirements of the Equality Act 2010 – particularly with relevance to the importance of knowledge and information management as a tool for compliance.
• Review internal guidance around recording vulnerabilities – this is to ensure temporary, as well as permanent, vulnerabilities are recognised, recorded and then removed from records once no longer appropriate.
• Develop organisational key data recording standard requirements – this will ensure the landlord has good records that support the landlord and demonstrate compliance with national standards. It should also set out the minimum standard to which data must be entered.
• Stress test systems prior to a merger – this will identify whether they can ‘talk’ to each other; data can be securely transferred; and ensure that staff from each landlord can access the data they need.
• Set out clear requirements of operatives before they are allowed to record an appointment as missed – this should include ensuring that the appointment was notified to the resident, it was made at a time they could attend, checking that any contact requests were adhered to, guidance on what level of contact.

Richard Blakeway, Housing Ombudsman said: “Successful knowledge and information management starts with an understanding and appreciation of its benefits to both the landlord and its residents. This needs to be centrally led, with senior leaders clear about the importance of knowledge and information management, and their standards and expectations”.

The full report is worth a read – it is an important sense check for boards and executives, and shows how data can really contribute to improvement in services. The Regulator of Social Housing has increasingly been downgrading organisations as a result of lack of data or accuracy of data and how this has impacted decisions at board level (see this as a repeat theme in our review of gradings below). It has also renewed its focus on asset and liabilities registers in light of the economic climate.

ClientEarth refused permission for derivative claim against Shell on directors' approach to energy transition and climate risk (High Court)

Environmental NGO, ClientEarth (CE), holds a small shareholding of 27 shares in multinational oil and gas company, Shell Plc.

In February 2023, CE applied to the High Court for permission to bring a derivative claim against the board of directors of Shell plc (Shell). CE brought the derivative claim in its capacity as a shareholder and alleged that Shell's 11 directors had breached their legal duties to assess, disclose and manage material risks to the company under section 172 of the Companies Act 2006.

Specifically, CE alleged that Shell's directors:

• Had failed to set an appropriate emissions target (in particular, they had failed to ensure that Shell had a measurable and realistic pathway to meeting their net zero target).
• In the strategy as regards the management of climate risk, did not establish a reasonable basis for achieving the net zero target and was not aligned with the Paris Agreement.
• Had not prepared a plan to ensure timely compliance with an order made by the Hague District Court which determined that Shell was under an obligation to comply with a 45% emissions reduction to be achieved by 2030.

The High Court refused CE's application. It shows a clear reluctance by the courts to impose additional duties on directors, and that a high threshold will apply to using the derivative claims procedure as a route to challenging a company's climate change strategy.

The case has however been closely watched and has certainly raised the profile of climate change risk with boards and the importance of robust net zero transition targets and strategies.

Regulatory Grades

Our review of regulatory upgrades/downgrades/regrades in the sector has highlighted the following themes:

• Downgrades to non-compliant governance grading resulting from:
  • skills gaps on the board – there was insufficient assurance that the board has the appropriate degree of skill, diligence, independence, prudence, and foresight, relevant to RP’s size, scale, and risk profile
  • inadequacies in management information, board reporting and board decision-making
  • under-developed risk management, stress testing and mitigation strategies, and
  • poor quality data resulting in an insufficient understanding of the provider’s asset base.

• Breaches of the home standard resulting from:
  • overdue fire risk assessments, electrical inspections, electrical remedial actions, asbestos surveys
  • not holding full and accurate data in relation to fire risk assessments
  • issues with its record keeping, monitoring, and evidencing of electrical testing
  • failing to comply with the Decent Homes Standard
  • a poor record of complaints handling as a result of poor record keeping, poor communication and a failure to learn from complaints, resulting in six in ten complaints being overdue
  • poor tenant engagement as a result of a lack of proactive, frequent and effective communication with tenants generally
  • a failure to ensure that electrical installations are in working and safe condition with 3,500 domestic properties not holding a current electrical condition report, and
  • a failure to have valid water safety risk assessments in place for a number of properties.

AOB

Say “Hello”

Sarah Greenhalgh and Diarmaid O'Sullivan will be attending the NHF Governance Conference in London on 22 June. If you are attending, we would be delighted to arrange a chat, or join us at the Planning and preparing the organisation for mergers and partnerships session at 13:40 with colleagues from Peabody and Great Places.

You can also say hello to the housing team during the CIH Housing Conference 2023, which is taking place in Manchester during 27–29 June. During the event, we will be presenting within two activities:

• How do we fund decarbonisation costs – Tuesday 27 June, 2:15pm - 3:00pm
• Best Practice Collaboration Hub: building safety – Thursday 29 June, 10:45am - 12:15 pm

Have you subscribed to receive our Legal Update Report?

As you will be aware, all registered providers are required to meet the Governance and Financial Viability Standard requirement to comply with ‘all relevant law’, and make certifications in their annual accounts in respect of this. We can assist you in a variety of ways, including the provision of our Legal Update Report. 

This useful tool which enables you to:

• integrate the product into your control and risk management frameworks
• easily and quickly identify priority actions and access tools to assist with this
• empower and inform your teams to take responsibility for effecting such actions
• confidently report back to the board on key risks areas and how these are being addressed

The next edition will be released in July. Find out more.

Recent housing articles

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