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First Priority problems are a reminder of the importance of good governance

Housing association boards need to learn lessons from the First Priority saga, writes Steve Douglas

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First Priority problems are a reminder of the importance of good governance, writes @Steve_Altair #ukhousing

“Small and specialised supported housing providers with rapid growth trajectories may not appreciate that the regulator's requirements apply equally to them,” says @Steve_Altair in reaction to the First Priority saga #ukhousing

Housing association boards need to learn lessons from the First Priority saga, writes @Steve_Altair #ukhousing

The Inside Housing story on the problems at First Priority is a familiar tale.

We have now passed the fifth anniversary of the near-collapse of Cosmopolitan housing association through a lack of understanding of its lease liabilities.

It has been more than 10 years since the governance failings at Ujima, which included the lack of effective business planning, risk assessment and business resilience that led to a much-publicised rescue operation.

Both were a wake-up call to the sector. Both were a reminder that bad governance leads to regulatory failure and, at worse, near misses.

“Small and specialised supported housing providers with rapid growth trajectories may not appreciate that the regulator’s requirements and expectations apply equally to them”

It is reassuring that these occasions are rare, and housing is largely a well governed sector that recognises risks and manages them well. However, our concerns should be twofold.

Firstly, small and specialised supported-housing providers with rapid growth trajectories may not appreciate that the regulator’s requirements and expectations apply as much to them as to large housing providers – they should understand that they do.

Secondly, there’s the rest of the sector, which might adopt the false assumption that “a near miss could never happen to us”.


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First Priority: the inside story of a housing association that almost went bustFirst Priority: the inside story of a housing association that almost went bust
First Priority strikes deal with creditorsFirst Priority strikes deal with creditors
Cosmopolitan: the true storyCosmopolitan: the true story

Too often we hear boards say: “We have a great CEO and exec team, so we are okay.” That’s not the right answer and not a safe assumption.

The right answer is confidence in your three lines of defence, of which a good executive team is just part of your first line.

You also need:

  • A strong board
  • A strong and capable audit and control function
  • An effective internal and external audit process

“The right answer is confidence in your three lines of defence, of which a good executive team is just part of your first line”

All of this needs to be combined with a proper understanding of the risks inherent to the business.

The regulator learnt a lot from the previous two near misses and adapted its regulatory approach in response.

The in-depth assessment is the most obvious manifestation of this learning. I’m sure it will learn from First Priority also.

But if co-regulation is real then it’s important that boards of housing providers learn the governance lessons, too. First Priority should be another wake-up call for us all.

Steve Douglas, co-chief executive, Altair

 

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