In a regulatory judgement published today (Thursday 14 December), the Regulator of Social Housing concluded that Origin Housing Limited (Origin) has breached the economic standards. As a result, it has been downgraded to G3/V3 status.
RSH lacks assurance that Origin has a robust risk control and business planning framework. It failed to ensure appropriate monitoring, reporting and compliance with its funders' covenants. In addition, it did not notify RSH promptly of a potential covenant breach.
Inadequate resourcing and data errors in financial reporting to its board demonstrate that Origin has not been managing its affairs with appropriate skill, diligence, prudence or foresight.
Poor financial governance and weak internal controls have impacted Origin's future financial viability, putting its social housing assets at undue risk.
Origin is working with RSH to address these issues as well as working to avoid covenant breaches and ensure it has access to sufficient liquidity. It is developing an action plan to strengthen its board oversight, internal controls and financial reporting.
Harold Brown, Senior Assistant Director for Investigations and Enforcement at RSH, said:
This case provides an important reminder that governing bodies must have an iron grip on their key risk exposures and ensure effective reporting. It was disappointing that the provider was aware of issues but did not promptly communicate them to the regulator.
Notes
- Registered providers of social housing with more than 1,000 units are awarded both governance (G) and financial viability (V) grades for their compliance with the Governance and Financial Viability Standard. Grades of G1 and G2 indicate compliance with the governance element of the Governance and Financial Viability Standard, while grades of G3 and G4 indicate non-compliance. Similarly, V1 and V2 grades indicate compliance with the financial element and V3 and V4 grades indicate non-compliance.
- RSH placed Origin on the gradings under review list on 13 October 2023 to indicate that it was investigating the provider's compliance with the Governance and Financial Viability Standard. Origin's previous grades were G1/V2 and they are now G3/V3. Origin continues to pursue a potential partnership with another registered provider to improve its financial resilience.
