The Regulatory Board for Wales is implementing a new approach to risk-based regulation from January 2014. Hugh Thomas explains the thinking
The Interim Evaluation of the Regulatory Framework, published this summer, identified a number of areas for improvement in the way in which housing associations in Wales could be regulated. The study was commissioned by the Regulatory Board with the support of the Welsh Government as part of the programme of action set out in the Housing White Paper.
The report findings have confirmed that the principles of the framework are sound and identified a number of areas for development as part of a continuous improvement approach.
The Welsh Government and the Regulatory Board welcome the findings of the evaluation and have worked in collaboration with Community Housing Cymru (CHC), the sector representative body, in developing a strategic action plan in order to drive change and deliver the improvements identified.
The improvements include the development of a more risk-based approach to regulation that will involve:
• changes to the way in which regulatory assessments are undertaken and reported and
• revising the content of financial viability judgements.
A renewed focus on a co-regulatory approach will be essential. The Regulatory Board, with the support of the minister, has already established three new sub groups to inform its work: the Regulatory Advisory Group; the Finance Advisory Group; and the Learning and Development Advisory Group. These groups complement the role of the Tenant Advisory Panel, established
in 2010, whose deliberations are of vital importance to the Regulatory Board. All groups include representatives from the housing sector and key stakeholders.
Over the summer and autumn of this year, the Welsh Government’s Housing Regulation Team has been working with advisory groups to develop a risk-based approach to regulation. On 14 October 2013, I circulated to the sector a discussion paper setting out proposals for the new approach.
The essential elements of the new approach include:-
– Regulatory assessments, financial viability judgement and regulatory engagement based on the level of risk facing the individual housing association and the quality and effectiveness of the management of those risks
Central to this approach is a ‘regulatory risk assessment’ identifying not only the specific risks confronting the association but also the extent of the sector-wide risks impacting on the association. The Housing Regulation team has worked with the housing association sector
to identify and agree current sector- wide risks that reflect the increasingly challenging operational environment in which housing associations must operate. The sector-wide risk analysis will be regularly reviewed to ensure that it is up to date.
– Focus on relationship management
The Housing Regulation team and housing associations will share responsibility for developing and maintaining the open and honest relationships which are fundamental to the success of the new regulatory approach.
– A co-regulatory approach which is clear on the respective responsibilities of each individual housing association, its board and its tenants/service users and of the regulator.
This element includes
• the board’s accountability to its tenants and service users with effective mechanisms in place for scrutiny;
• the ability to challenge performance in relation to governance, including risk management and financial management and • the review of services provided and promoting service improvement.
– An honest, open and transparent self- assessment will continue to be a key requirement of the new approach. Housing associations will still be required to carry out a regular self-assessment framed round the ten delivery outcomes set out in the Regulatory Framework, but the crucial change will be that the demonstration points set out under each of the delivery outcomes will be ILLUSTRATIVE ONLY. The housing associations will be encouraged to ‘OWN’ their self-assessment as a tool for improving their service delivery.
– Tenants will remain at the heart of regulation
A range of ways will continue to be available whereby tenants will be able to find out about, be involved in and influence the work and decisions of regulation. There will be a continued expectation that housing associations will focus their self-assessment on the needs and aspirations of their tenants and the impact of outcomes on them. This will, in turn, enable tenants and service users to shape services and drive improvements resulting in positive outcomes.
I was pleased to learn that the response from the housing association sector to the proposals for change has been overwhelmingly positive. I, in turn, await with interest the results of the work being undertaken, through Community Housing Cymru, aimed at developing proposals to pilot a sector wide tenants’ survey (developed in conjunction with Welsh Government and other stakeholders) to inform the new approach. Evidence already exists that the work being undertaken to implement the new arrangements has resulted in the promotion of the co regulatory approach and the advantage of effective joint working.
Work continues apace to allow implementation of the new approach as from January 2014. As I write this article, a special meeting of the Regulatory Board has been convened for 11 December 2013 to endorse the arrangements for taking the new strategy forward. I would be surprised if I, or one of my colleagues, were not asked by Welsh Housing Quarterly to submit a further progress report to your Spring or Summer edition.
Hugh Thomas is chairman of the Regulatory Board for Wales