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Legal changes

National Housing Federation publishes new Code of Governance

The new Code of Governance calls for all registered providers to adopt by the 31 March 2021.

The National Housing Federation (“NHF”) issued a new Code of Governance (“the code”) in November which it calls for all registered providers to adopt by the 31 March 2021.

What has changed?

The 2020 code replaces the 2015 code and has been simplified from eight requirements into four principles covering:

  • Mission and values
  • Strategy and delivery
  • Board effectiveness
  • Control and assurance.

Principle one: mission and values covers matters such as integrity and trust, equality and diversity, culture and resident focus. Resident focus is now an explicit requirement to ensure good governance. This principle may require registered providers to review how they interact with residents, to ensure that their views and insights inform an registered providers’ decisions. It will also require boards to gain regular assurance around all matters related to health and safety compliance.

Principle two: strategy and delivery covers matters such as resources, in particular sustainability and the environment, working with others in order to fulfil social purpose and a more definitive set of expectations of the Chief Executive (or equivalent). This principle also includes details about employees and group structures and other partnership arrangements. This principle may require registers providers to review their strategies to ensure that financial, environmental and social stability is reflected. It may also require a review of the role of the Chief Executive, to ensure compliance. Additionally, joint ventures are now covered by the code and as such registered providers should review and joint venture arrangements that are in place, to check compliance. In relation to groups, it is for the parent board to decide the application of the code to its subsidiaries.

Principle three: Board effectiveness covers matters such as the various roles and responsibilities of chairs, or which relate to subsidiaries, as well as detail on board composition, selection, review and tenure. This principle may require registered providers to review their constitutions and board policies to ensure that they comply with the new code.

Principle four: control and assurance covers matters such as audit and audit committees, risk and robust board assurance and registered providers may need to review their internal audit arrangements, as well as the structure of audit committees and the role the board plays in risk management.

Part of the aim of the new code is to be less prescriptive to allow registered providers flexibility in how compliance is achieved. There are also new expectations within the code relating to matters such as board renewal, equality and diversity and organisational culture.

Why the change?

The new code is intended to reflect changes in the operating environment and emerging issues within the sector to make sure that:

  • The views and needs of residents are at the heart of strategic decision-making
  • Measures are in place to ensure that stakeholders are kept safe
  • Boards have an oversight of risk and thoroughly test the impact of potential risks.

What remains the same?

The comply or explain principle of the code remains. Where a registered provider cannot comply with part or parts of the new code, it must be able to demonstrate that good governance is achieved by other means.

Transition and next steps

The relevant people should review the new code and carry out a gap analysis, as well as provide a report to the board on the new code (with a copy of the code) recommending its adoption before taking action on ensuring compliance. The new code also includes links to other regulatory bodies, which are relevant to many registered providers, such as the Charity Commission, the Care Quality Commission and the Regulator for Social Housing, and so it will be important to ensure that compliance is not considered in isolation.

Registered providers may need to review a number of policies and procedures, as part of this exercise, as well as their constitutions. We at Weightmans can of course assist with reviews and any changes that may be required to achieve compliance.

As the code is closely linked to the National Housing Federation commitment to be accountable to residents and involve them in decision-making, organisations adopting the code should also adopt the NHF’s Together with Tenants charter.

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