Scottish Housing Regulator Board

SCOTTISH HOUSING REGULATOR BOARD

MINUTES OF THE BOARD MEETING

23 September 2013

Present:

Kay Blair (KB)Scottish Housing Regulator Chair

Mike Dailly(MD)Scottish Housing Regulator Board member

Anne Jarvie (AJ)Scottish Housing Regulator Board member

Simon Little (SL)Scottish Housing Regulator Board Member

Lisa Peebles (LP)Scottish Housing Regulator Board member

In attendance:

Michael Cameron (MC)Chief Executive

Ian Brennan (IB)Director of Regulation (Finance & Risk)

Christine Macleod (CM)Director of Regulation (Governance & Performance)

Iain Muirhead (IM)Director of Strategy and Communications

Roisin Harris (RH)Corporate Governance Manager/Secretariat

Helen Shaw (HS)Assistant Director Regulation (Finance & Risk) (items 9&10)

Observing

Shaun KeenanAssistant Director of Financial Regulation

Kirstie CorbettResearch and Analysis Manager

Agenda Item
1 / Chair’s Welcome
The Chair welcomed the Board and those in attendance to the meeting. She also welcomed the staff observers.
2 / Apologies
Apologies were received fromRussell Pettigrew, Wesley Mitchell and Sid Patten,Scottish Housing Regulator Board members.
3 / Declaration of Interests
There were no declarations of interest.
4 / Minutes from the previous meetings
The Board approved the minutes from its previous meeting on 20 August 2013.
Action /

RH to publish the minutes for 20 August 2013.

5 / Chair’s Report
The Chair provided a report on her activities since 20 August 2013. KB reported that she:

had an introductory meeting with Lesley Fraser the new Director for Housing, Regeneration and Welfare Reform, Scottish Government. KB reported Lesley will be meeting the rest of the Board in October;
hosted with AJ a meeting with staff and they were pleased tohear staff views and to hear that new staff felt welcomed into SHR;
met with two Chief Executives of RSLs, to follow up discussions from her last meeting of RSL Chief Executives; and
has been in contact with the Chair of SFHA aboutSHR’s development of a model code of conduct.

MD reported he spoke at a recent Capita conference on tenant engagement.
6 / Chief Executive’s Report
The Chief Executive provided the Board with a report on his and the organisation's activities since the last Board meeting on 20 August 2013. MC highlighted: the draft budget outcome for SHR; feedback from recent meetings with the Council of Mortgage Lenders and some auditors; and proposals forpipeline projects.
The Board discussed the draft budget and the potential impact on SHR. The Board debated the mix of skills necessary to deliver effective regulation in future, given increasing risks in the economic environment. It stressed the need for continued good analytical skills and expertise. The Board asked MC to engage with the Scottish Government on SHR’s future budget settlement.
The Board approved the three pipeline project proposals:

sector contingency planning;
an insolvency project; and
development of an intranet for SHR staff.

It noted these projects would only be brought forward if funding became available through 2012/13 due to other work not being required as planned. The Board agreed ET could prioritise this work as required.
The Board also discussed:

the response to SHR'srecent welfare reform survey and plans for the next quarterly survey, including considerations to ensure all landlords complete future surveys;
an RSL’s plans to become a subsidiary of WHG;
feedback from the recent Governance Matters publication;
the Scottish Government’s legislative programme for 2013-14; and
Freedom of Information guidance.

MC also updated the Board on a meeting for rural social landlords he attended recently in Orkney.
The Board noted the Chief Executive's report.
Action /

MC toto engage with the Scottish Government on SHR’s future budget settlement.

7 / Intensive Engagement Update
CM gave the Board a verbal update on current serious regulation engagement cases. The Board noted CM’s update.
8 / Policy
Governance Matters Events
CM presented the proposed Governance Matters activity for the remainder of 2013/14. She outlined proposals for the next series of events including: new locations, weekend events and the use of two facilitators to cover a broader range of the governing bodies roles. The Board discussed:

the impact of this work on SHR's staff resources;
potential involvement of Board members;
the impact of governance visits to RSLs and SHR'scapacity to carry these out;
its enthusiasm for new delegates to attend the next series of events; and
issues that may arise if SHR worked with a training provider to deliver the events.

The Board noted the update: it agreed it was enthusiastic for the events to continue and welcomed the proposal to include venues out with the Central Belt, provided attendance justified the cost. The Board asked CM to scrutinise the associated staff resources to ensure SHR can sustain the input required The Board approved the enhanced budget, but requested CM try to achieve it as close to the original budget as possible.
Action /

CM to proceed with the next series of Governance Matters events, scrutinise the impact on staff resources and ensure it is delivered within budget.

9 / Regulatory Advisory Note, Pensions & Welfare Reform
IBadvised the Board of the plans for a regulatory advisory note (RAN) to help RSLs consider the risks presented by the historic underfunding of pensions and welfare reform. The Board discussed the potential impact of welfare reform on RSLs. It noted the findings of the welfare reform demonstration projects, growing challenges around arrears and the uncertaintyaround the timetable for universal credit. The Board discussed the potential impact on homelessness duties and the associated costs and the time it may take to build the financial capacity of some tenants.
The Board agreed it was important to keep the Scottish Government up to date about any impact on RSL performance statistics.
The Board also discussed the Scottish Housing Association Pension scheme deficit and when the risks may crystallise. It debated the choices available to RSLs to handle the funding gap. The Board agreed the importance of transparent rent policies and also details of staff pay increases. It agreed the charter outcomes will help assess value for money and tenant satisfaction.
IB confirmed SHR's annual risk assessment of RSLs would take risks associated with pensions and welfare reform into account.
The Board noted the importance oflenders’ confidence in the ability of SHR to regulate and the relationship this has to lending and pricing decisions.
Action /

IB to publish a regulatory advisory note on the risks presented by underfunding of pensions and welfare reform.

10 / Approach to 2014/15 RSL risk assessment
HS and IB presented the proposed approach to the risk assessment process for RSLs in 2014/15 and the proposed timescales. HS highlighted SHR will aim to publish regulation plans ahead of 31 March 2014. CM confirmed the housing options thematic will inform the risk assessment process. The Board noted the proposed delivery timetable and discussed SHR's capacity given the risks around pensions and welfare reform to the sector and skills required particularity around treasury management. The Board stressed the need constantly to review SHR resources and skills, given the changing landscape. The Board agreed it was enthusiastic for the approach to the risk assessments and approved the methodology.
Action /

HS to implement the risk assessment process for 2014/15.

11 / Living Wills
MC presented an information paper on the developments around the use of living wills by landlords and on SHR’s current thinking on their potential place in SHR’s regulatory framework. He highlighted the potential for additional assurance levels, particularly as regards larger or more complex RSLs. The Board discussed:

resource implications for SHR and how it might use a living will; and
the benefits in organisations fullyunderstanding their assets and liabilities, which could help protect tenants and others in times of failure.

The Board noted creating a living will would be challenging for some organisations and agreed any use should be proportionate. It also noted the common use of living wills in other sectors.
The Board noted thereport, agreed it was supportive in principle and requested MC keep it up to date with developments and any engagement with the sector.
14 / Updates and Reports
Business Intelligence Update
MC presented an update on the progress with the delivery of SHR's business intelligence project. MC reported the project status is green and it is making good progress. It is moving into a more intensive phase for SHR’s staff and
system testing is about to commence.
The Board discussed budget monitoring and MC confirmed the Project Board monitors the budget. He reported the project funding was based on an estimate so the Project Board monitors against this estimate and also the contracted spend. MC confirmed there is currently contingency.
The Board discussed the handover of the project to in-house staff. MC confirmed the Project Manager and new Business Intelligence Manager were working well through a gradual handover phase. He reported the Project Manager will continue to have a role in order to provide appropriate assurance.
The Board noted the update and thanked the Project Board for its work.
15 / Members’ reports
AJ reported the next meeting of the Commission on Health and Wellbeing is in October and she will provide full details of her appointment after this.
16 / Matters Arising
The Board approved the matters arising report and agreed items completed or to be removed. It also agreed some changes to the format of report to highlight any delays better and be more specific about timescales.
17 / Effectiveness of meeting and papers
The Board considered the effectiveness of the meeting and papers and welcomed that there was more time for discussions during meeting.
19 / AOB
IM updated the Board on plans to present on the findings of the first survey of the National Tenant and Service User panel at the October Board meeting. IM also reported the next phase of qualitative work was about to commence.
IM confirmed the report on the welfare reform survey would be circulated to the Board during October ahead of publication for feedback.
The Board agreed it was happy for the ET to deal with the publication of the APSR and that the press release should trail the Regulatory Advisory Note on Pensions and Welfare Reform.
KB reported she has agreed to speak at the Harper MacLeod National Conference in February, on the same day as the Board meeting. She reported she is working with RH on the agenda planning to allow for this meeting to take place on the afternoon 25 February 2014.
In preparation for JA’s appearance at the afternoon workshop, the Board discussed mutual areas of interest and respective challenges.
The staff who observed the meeting thanked the Board for the opportunity. They agreed the Board dealt with a range of issues and had been strategic in its approach.
20 / DONM
The next Board meeting will be on 28 October 2013. The Board noted Lesley Fraser will be attending to meet with Members.
21 / Afternoon workshop
The Board received a presentation Julian Ashby, Chair, HCA Regulation Committee