Decision Process for Housing Associations Following Inspection – “No Assurance” Rating

1.  Introduction

When a Housing Association receives a “No Assurance” rating following an Inspection visit, there are a number of options which the Department will consider to address the concerns.  This guidance is aimed at providing an overview of that process.

The option chosen for any given situation will be dependent on a number of issues such as the history of past performance, the nature and extent of weaknesses discovered, the role/responsibility of the Board and Management for the performance, and whether or not the financial viability of the Association has been compromised.   

2.  Options

Essentially, in the event of a “No Assurance” Inspection rating, the Department has four courses of actions available to it.   These are:

3.  Option 1 - Action Plan

The Action Plan process involves the Association providing details of how it will address the issues raised in the Inspection.  The Association will also be expected to indicate the timescale for its implementation.  The Department’s role is to, firstly, ensure that the Action Plan represents a reasonable response to the issues both in terms of remedial action and timescales.  Secondly, the Department will monitor implementation on a quarterly basis to confirm progress.

This approach will be appropriate where previous performance has been acceptable and the findings, whilst serious, do not call the future of the Association into question.

In effect this will give the Association an opportunity to address what may be regarded as a temporary dip in performance.

4.  Option 2 - Changeof Board / Management

A change of Board or Management, either in part or total, will be sought where the Department considers that the “No Assurance” rating is as a result of failures of the Board or Management.  For example, where 2 or more successive Inspections receive a “No Assurance” rating, the Department will look for evidence that the Association has taken appropriate remedial action following the previous Inspection(s).   Where the same issues are raised over a number of Inspections then there has been a failure of both Management and the Board.

Failure at Board level could be as a result of such issues as:-

Ineffective management could include such issues as:-  

It should be noted that where poor performance extends beyond one Inspection period,  much of the responsibility must rest with the Board, as it has the responsibility and authority to effect appropriate change within the Association.  If the Department considers a change of Management as the correct approach then the Housing Association will be required to investigate and, where appropriate, consider disciplinary action against members of the Management Team.

This approach will be appropriate where the current Management and Board have failed over two or more Inspections and the Department is content that the Association is on a sound financial footing.  The Association will obviously also be given the option of merging with another suitable Association if it so wished.

5.  Option 3 - Merger with Another Association

The Department will seek, or recommend merger, where the Inspection has revealed fundamental issues which would call into question the financial viability of the Association eg. an Association trading at a loss, or where an Association had entered into financial commitments which it did not have the resources to sustain.

In such circumstances the financial vulnerability of the Association would preclude the option of a change of Board and/or Management.

The Department will have to approve any proposed merger partner and, where appropriate, may also wish to indicate if there are any members of the Board or Management Team who should be excluded from the merged organisations and whether the new employer should commence, or continue, disciplinary action against members of the Management Team.

6.  Option 4 - Inquiry

Inquiry is the ultimate sanction available to the Department.  It will apply to those Associations who have been offered Options 1 and/or 2  but have refused to accept either.  

The Inquiry will involve the appointment of an independent professional to review the body of evidence following the Inspection.  The Inquirer may also request an independent financial audit to provide additional information.

It is intended that the cost of the Inquiry will be met (at least in part ) by the relevant Housing Association.

7.  Impact on the Development Programme

Associations with a previously sound record of performance will not be removed from the Development Programme on the basis of a first “No Assurance” rating.  In these circumstances Option 1 will apply and the Association will be given a reasonable period of time to demonstrate that it has effectively addressed the concerns raised.  Progress against the Action Plan will be monitored on a quarterly basis prior to a Follow-up Inspection between 6 and 12 months.  However, it should be noted that where the Department is not satisfied that sufficient progress is being made during the Monitoring period, then consideration will be given to removing the Association from the Programme.

Where an Association receives a second “No Assurance” rating, it will automatically be removed from the Development Programme.

8.  Exceptional Circumstances

It is the intention of Housing Division to apply the above procedures when considering what action to take following each inspection.  However, circumstances may arise where the nature of the findings in a first No Assurance (Unacceptable) Inspection may necessitate us moving immediately to the Options 2-4.  One such scenario, for example, would be where the financial viability of an association has been put in jeopardy.  In such circumstances it may not be possible to delay any action until after a second inspection.   

9.  Contact with NIFHA

NIFHA already receive quarterly updates of progress against the Inspection Programme and future updates will also include brief details of any associations which attract the concern of the Department.  In addition to this information flow, we have further agreed with NIFHA that prior to the Department commencing Inquiry proceedings, we will advise NIFHA of the association(s) involved.  NIFHA representatives would then have an opportunity to discuss the situation with the relevant association(s) in advance of the Inquiry commencing.