Constructing a new regulatory framework in Scotland

We have proposed a regulatory framework centred on landlord self-assurance.

Almost all of our stakeholders support this and have told us that the introduction of an Annual Assurance Statement for each social landlord is a good idea.

Through the Annual Assurance Statements, each landlord would confirm that it meets regulatory standards and requirements, or set out what it is doing to address any instances of non-compliance.

The statements would be approved by each Registered Social Landlord’s (RSL) governing body or the appropriate committee of the local authority.

“We believe that the Annual Assurance Statements should be short and simple, and supported by good evidence.”

We would use the statements in our risk assessment of all landlords.

Through our discussions, we heard questions about how this will work in practice, how detailed the statements should be and how landlords should get the necessary assurance to support their statements.

Some asked that we produce a template for the statement, while others want clear guidance on what the statement should give assurance on.

The statement would be an end point in each landlord’s own self-assessment and assurance processes with landlords assuring first themselves, then their tenants and last the regulator. It’s about governing body members and committee members getting the assurance they need.

We believe that the statement should be short and simple, and supported by good evidence. We won’t collect the supporting evidence from landlords, although we may look at it if we are engaging with a landlord.

We do need to be clear on our expectations for the statement and the processes to support it, so we will keep speaking to stakeholders over the coming months to help us develop this approach.

There is overwhelming support for internal audit to be mandatory for all RSLs.

“We don’t plan to make audit committees a regulatory requirement for all RSLs at this time.”

We had also raised the possibility of mandatory audit committees. It is good practice to have an audit committee and to have at least one member with recent and relevant financial experience.

Audit committees can support an effective internal assurance framework, and we believe that all RSLs should work towards this.

However, in recognising the diversity of RSLs, we don’t plan to make audit committees a regulatory requirement for all RSLs at this time.

The governing body of each RSL must assure itself on how it manages and supports effective internal audit in the organisation.

Many of those we talked with stressed the importance of us stating clearly our view of each landlord.

At the moment we state the engagement level we have with each landlord, rather than our regulatory judgement about them.

Some who responded, told us that clarity on the regulator’s view will be critical in a regulatory framework that aims to build a culture of assurance and openness.

Having considered this, we believe it is right that we should make our regulatory view of each landlord readily available to tenants, other service users and others with an interest in social landlords.

It is likely that we’ll focus this around our judgement on each landlord’s compliance with regulatory standards and regulatory requirements.

“We believe it is right that we should make our regulatory view of each landlord readily available to tenants, other service users and others with an interest in social landlords.”

We will develop our thinking on how we do that, and we’ll keep talking to landlord representatives and others over the summer to help us develop an approach.

Many of our stakeholders stressed the importance of us continuing to promote a strong tenant voice and to support tenants with accessible and useful information about their landlord.

Tenants have told us that information on rent affordability and landlord costs is increasingly important to them. We are looking at how we can get good information in useful formats to as many people that want it as possible.

Alongside exploring how technology can help us do this, we’ll be talking to tenants and others who use services provided by social landlords about how they want to get and use information.

We’ll also be talking to landlords about the data we collect on their performance against the Scottish Social Housing Charter, to make sure the indicators are as meaningful as possible.

We’ll use all of these conversations to help us construct a new regulatory framework.

We’ll then consult on that new framework in the autumn.

Michael Cameron, chief executive, Scottish Housing Regulator