Company Secretary Snapshot - March 2024

Welcome to March’s snapshot. This month we’re looking at the latest updates resulting from the Social Housing (Regulation) Act, the latest changes coming in under the Economic Crime and Corporate Transparency Act 2003 and the Charities Act 2022, updates from the Charity Commission and the Housing Ombudsman and more. Enjoy!

Social Housing (Regulation) Act 2023 update

1. Regulator of Social Housing confirms final consumer standards

On 29 February 2024, the Regulator of Social Housing (RSH) published its new consumer standards. This follows the RSH consulting extensively on the draft standards between July and October last year. The RSH has now published the outcome of the consultation under its Decision Statement on “Reshaping consumer regulation 2024”. This Decision Statement provides a summary of the key areas of feedback. It also sets out its decision on the final set of consumer standards and accompanying documents.

In response to the consultation feedback, the RSH has made a number of minor changes to the consumer standards to improve their clarity and consistency. The RSH has also amended the Code of Practice to help amplify the outcomes it expect registered providers (RPs) to deliver. 

The Decision Statement also includes the RSH’s reply to the response given by Department for Levelling Up, Housing and Communities to the consultation on directions to the RSH on tenant rights and complaints. The direction required the RSH to introduce a standard relating to the provision of information to tenants about their rights and how they can complain about their landlord. These requirements will be included in the Transparency, Influence and Accountability Standard.

We have a detailed gap analysis tool which outlines the changes to the consumer standards and actions that should be taken to check the compliance position. We have also been carrying out training with boards, executive teams and customer committees on the changes and their respective roles. Please do contact one of the team if you would like to find out more.  

2. Updated ‘Regulating the Standards’ Guidance

The RSH has updated its regulation guidance to reflect the changes being brought in by the Social Housing (Regulation) Act 2023 (SHRA 23) and in particular the reshaped consumer regulation which will begin from 1 April 2024.

One of the key updates to the guidance is the introduction of the new C-grades which will be used to monitor and regulate the new consumer standards. These are detailed in the RSH’s publication ‘Reshaping consumer regulation: Our new approach”. Like the governance and viability grades, there are four consumer grades as follows:

• C1: the RP is delivering the consumer standards outcomes and “identifies when issues occur and puts plans in place to remedy them and help prevent them happening again”.
• C2: there are “some weaknesses” in how the RP is delivering against the consumer standards outcomes and improvement is needed.
• C3: there are “serious failings” in how the RP is delivering against the consumer standards outcomes and significant improvement is needed.
• C4: there are “very serious failings” in how the RP is delivering against the consumer standards outcomes. The RP must make “fundamental changes so that improved outcomes are delivered”.
  

The RSH has also published new guidance on how it will carry out inspections of RPs. Inspections will replace ‘in-depth assessments’ and will be made up of seven components: Strategy; Structure; Service Outcomes; Risk Management; Transparency, Influence and Accountability; Financial Resilience; and, Governance.

The guidance is incredibly helpful in understanding the RSH’s approach and demonstrates increased transparency in the way in which the RSH regulates. We strongly recommend that you take time to read this through.

3. Consultation outcome: RSH consultation on statutory guidance under s215 of the Housing and Regeneration Act 2008 (HRA 2008)

On 7 November 2023, the RSH published a consultation on revisions to its statutory guidance under the HRA 2008 to reflect the new enforcement powers for the RSH introduced by the SHRA 23. This consultation closed on 16 January 2024.

The RSH has now published the final updated statutory guidance which will come into force on 1 April 2024. As a result of the consultation, limited changes have been made to the following aspects of the guidance:

Guidance Note 2 – which deals with inspections 
Guidance Note 16 – which deals with the removal of officers 
Guidance Note 19 – which deals with insolvency and moratorium powers

Economic Crime and Corporate Transparency Act 2023 – Updates to Companies House Powers

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduces a number of changes to company law, aimed at preventing abuse of UK corporate structures and tackling economic crime. A number of provisions came into force throughout March as follows: 

1. Part 1 of ECCTA

Part 1 Most of the provisions of Part 1 of ECCTA came into force on 4 March 2024, including:

• director disqualifications. Individuals are now prohibited from being appointed as a director of a company if they are disqualified under the directors' disqualification legislation. 
• companies will now be required to reassert in their annual statements that the intended future activities of the company are lawful. 
• the power of the courts to rectify the names on the register of members is now extended to rectifying all information on the register. 
• companies are now required to maintain a registered appropriate email address.
  of ECCTA

2. Application to Limited Liability Partnerships 

On 4 March 2024, the Limited Liability Partnerships (Application of Company Law) Regulations 2024 came into force to ensure that certain of the provisions of the ECCTA also apply to LLPs

3. Rectification of registered address and principal office registered address

On 4 March 2024, the Registered Office Address (Rectification of Register) Regulations 2024 and Service Address (Rectification of Register) Regulations 2024 came into force. These regulations establish the new processes envisaged by the ECCTA, by which Companies House may change the registered addresses relating to a company, its directors, secretaries and registrable Persons of Significant Control (PSCs) or Relevant Legal Entities (RLEs) to a default address.

On 5 March 2024, the Principal Office Address (Rectification of Register) Regulations 2024 came into force. These regulations give Companies House power, either on application or on its own motion, to change the address registered as the principal office of a relevant person (i.e. a director, secretary, RLE or PSC) to a default address, where Companies House is not satisfied that the address is in fact their principal office. 

Before now, Companies House could only change address details on application and where is was found that the addresses were used without authority. These new powers may be used when Companies House becomes aware that a service address, registered office address or principal office address is “not appropriate”.

4. Companies House Guidance

To reflect the changes being brought in by the ECCTA, Companies House has updated several of its forms and its guidance, including those related to:

• Incorporation and names
• Filing the confirmation statement
• Strike off, dissolution and restoration
• Registrar of Companies: rules and powers

Housing Ombudsman consultation on its Business Plan for 2024/25

The Housing Ombudsman (HO) has launched a consultation on its Business Plan for 2024/25. The Business Plan covers the final year of the HO’s 2022/25 Corporate Plan, which aims to deliver an independent, visible and proactive service for RPs and their tenants. The HO is using this consultation to seek views on what learning tools it can provide to support RPs in improving their complaint handling and to test support for changes to the fee regime to incentivise better complaint handling. 

The three areas of focus for the HO in 2024/25 are: 

1. New priority: improving local complaint handling
2. Delivering new statutory powers and duties 
3. Delivering strategic programmes

The consultation is seeking feedback on two aspects of its planned strategic actions – the learning tools that the HO can provide for RPs to improve local complaint handling and to test support for possible changes to the HO’s fee regime beyond 2024/25 intended to drive improved RP complaint handling behaviour. 

If you’d like to participate, please respond to the consultation online by 5 April 2024. 

Parker Review on ethnic diversity on boards

On 11 March 2024, the Parker Review Committee published an update report which includes the results of its latest survey on the ethnic diversity of boards and senior management of FTSE 350 companies and large private companies. The Parker Review, and the targets that it sets, provide an important benchmark and objective criteria to encourage fair representation of ethnic minorities. The scope of this review was extended to include senior management and large private companies. 

A summary of the data collected as at December 2023 is set out below: 

• The percentage of companies with at least one ethnic minority director:
  • 96% of FTSE 100 companies 
  • 70% of FTSE 250 companies 
  • 44% of private companies
• The percentage of board directorships represented by ethnic minority directors:
  • 19% of FTSE 100 companies 
  • 13.5% of FTSE 250 companies 
  • 11% of private companies
• The average percentage of ethnic minority representation in senior management:
  • 13% of FTSE 100 companies 
  • 12% of FTSE 250 companies 
• The average target for the proportion of ethnic minority representation in senior management in 2027:
  • 17% for FTSE 100 companies 
  • 15.5% for FTSE 250 companies

While the Parker review relates primarily to FTSE 350 companies, it gives an indication to RPs around benchmarking and expectations more widely.

Charity Commission Strategy 2024-2029

The Charity Commission has published its strategy for 2024-2029. Its priorities for the next five years are: 

1. Be fair and proportionate in our work and clear about our role 
2. Support charities to get it right but take robust action where we see wrongdoing and harm.
3. Speak with authority and credibility, free from the influence of others.
4. Embrace technological innovation and strengthen how we use our data.
5. Be the expert Commission - where our people are empowered and enabled to deliver excellence in regulation.

In early 2024, the Charity Commission will begin work to identify a set of strategic impact measures. In mid-2024, it will set out the new measures, aligned to the five strategic priorities. In July 2025, it will report against those measures for the first time in the Annual Report for 2024-25.

The Chair of the Charity Commission said: “We believe that, in working to this strategy over the next five years, the Commission will cement its ambition to be an expert regulator, and so will help ensure that charities’ enduring place within our society is protected, and secured, into the future”.

Charites Act 2022 – changes come into force

The Charities Act 2022 has been implemented in phases over the past 18 months. On 7 March 2024, the latest tranche of changes came into force including:

1. Making changes to governing documents

The new statutory power that trusts and unincorporated associations can use to make changes to their governing document is now in force. The charity trustees must be satisfied that this amendment is expedient in the interests of the charity and they must not use the power in any way that would result in the charity ceasing to be a charity. Note that these charities will still need to get the Charity Commission’s consent to make certain ‘regulated alterations’ in the same way as charitable companies and Charitable Incorporated Organisations (CIOs).

Charitable companies may now amend their objects without the consent of the Charity Commission, provided only that the amendments do not alter the substance of its charitable purposes.

A number of other related changes in relation to how charities can amend their constitutions are also in force and these include:

• how unincorporated charities must pass trustee and (where they have members) member resolutions when using the new power
• that the Charity Commission will apply the same legal test when deciding whether to give authority to charitable companies, CIOs, and unincorporated charities changing their charitable purposes
• a power for the Charity Commission to give public notice to, or to direct charities to give notice to, regulated alterations they make, and
• statutory powers for certain (small) unincorporated charities to change their governing document have been repealed.

2. Selling, leasing or otherwise disposing of charity land

• provisions relating to disposals or taking out mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators
• changes about what must be included in statements and certificates for both disposals and mortgages.

3. Charity mergers

For certain mergers, new rules are now in force that will allow most gifts to charities that merge to take effect as gifts to the charity they have merged with. The statutory process for certain (small) unincorporated charity mergers has been repealed.

4. Other changes

The Act enables the Charity Commission to:

• authorise a trustee to receive or retain a payment for work completed for the charity where the Charity Commission decides it would be inequitable for a trustee not to be paid
• confirm defective or potentially defective trustee appointments.

Modern Slavery Act 2015: call for evidence

The House of Lords Committee on the Modern Slavery Act 2015 has published a call for written evidence for its inquiry into the impact and effectiveness of the 2015 Modern Slavery Act. It is inviting interested individuals and organisations to submit their views on these. The Committee is seeking submissions relating to the following topics:  

• The extent to which the Modern Slavery Act 2015 has been impacted by recent legislation
• Whether the Act has kept up-to-date with developments in modern slavery and human trafficking, both within the UK and internationally
• The efficacy of the provisions of the Act relating to supply chains
• The efficacy of the other key provisions of the Act, including definitions, sanctions, reporting, enforcement, and the statutory defence for victims
• The role of the Independent Anti-Slavery Commissioner, including whether the post is sufficiently resourced, and the process of appointment
• Suggestions for improvements that could be made to the Act to help it to better achieve its aims.

The deadline for submissions was 10am on Wednesday 27 March 2024.

Appointing Corporate Directors

On 1 March 2024, the Small Business, Enterprise and Employment Act 2015 (Commencement No. 8) Regulations 2024 were published. These effect a new section 156B of the Companies Act 2006 which enables the Secretary of State to make regulations setting out the circumstances in which legal persons (i.e. corporate entities as well as natural persons) may be appointed as directors of companies, as derogations to the proposed general prohibition on corporate directors, provided the company also has at least one natural director. We will keep you posted when the Secretary of State brings forward the necessary regulations.

Regulatory grades

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

Governance upgrades resulting from:

• strengthening governance to better achieve corporate objectives
• addressing weaknesses in internal control framework
• enhancing procedures for managing conflicts of interest
• improving the quality and accessibility of information in the assets and liabilities register
• undertaking a comprehensive review of operations with external support, leading to better
• consideration of risk and return in activities
• establishing a new value for money strategy with measurable targets linked to corporate objectives
• developing and improving collective understanding of financial performance and ability to make
• decisions and challenge the executive on financial matters
• strengthening of board skills in relation to business and financial planning
• recruitment and succession planning which reflects a re-balancing of finance, customer focus and
• asset management skills on the board
• reviewing financial reporting which delivered improvements in the accuracy, consistency and
• timeliness of information received by the board and RSH
• addressing gaps in the financial assurance framework
• improving wider risk management framework.
• reviewing terms of reference for the board, committees and leadership team to clarify responsibilities
• in relation to financial planning and stress testing, treasury management, and asset management.

Breaches to the Homes Standard resulting from

• more than 20,000 overdue fire remedial actions from fire risk assessments (including 200 that were high risk)
• over 1,500 uncompleted repairs relating to damp and mould (two thirds of which were high risk)

AOB

NHF Governance Conference

Will you be attending the NHF Governance Conference this year? This popular annual event will be taking place in London on 19 June.

This year we will be hosting a breakout session on Resourcing the governance team and battling merger fatigue (at 12.15-13.00). Join Rose Klemperer – Partner, Bevan Brittan and Sarah Cameron – General Counsel and Company Secretary, Peabody, as they discuss:

• Innovative solutions to a lack of resource in your governance team
• The increasing role of governance in coordinating changing strategic expectations
• Sector changes following merger activity and compliance requirements across large and diverse group structures.

We look forward to seeing you!

Legal Update Service

As you will be aware, all RPs 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.
 
With so much change in the sector at the moment, it can be difficult to monitor, interpret and implement requirements. We offer a variety of services to enable you to demonstrate compliance, including a subscription-based legal update service covering key legal, regulatory and policy changes within the social housing sector.
 
Our approach has been created in partnership with the sector, for the sector, and moves away from a ‘tick box’ approach to a meaningful tool, enabling 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 your Board on key risks areas and how these are being addressed.

To find how you can subscribe and watch our video introduction to our legal update service, please contact Diarmaid O’Sullivan.