Ashby: 'Housing associations should adopt merger code'

This is a call from Julian Ashby, chair of the regulation committee at the Homes and Communities Agency (HCA), who also slammed landlords for allowing chief executive retirement dates to occasionally dictate merger activity.

Speaking at the Social Housing Finance Conference in London yesterday, Mr Ashby encouraged associations to adopt a ‘takeover code’ – similar to those used in big business – to govern mergers.

He also used his speech to reveal the regulator is considering changes to the way it assesses value for money, based on its current in-depth assessments.

‘We do have quite a lot of experience of mergers and some are clearly done for the right reasons and achieve real value,’ he said.

‘However, we all know that some mergers seem to be driven more by retirement dates than by commercial or social logic. This really does the sector no favours and feeds the view that the sector is not prepared to push itself on value for money.

‘If, as is more than possible, the operating environment gets tougher, then the current approach to mergers will need to change.’

He said the code would not be concerned with the benefits of any merger, or designed to encourage or hinder mergers, but recognises core principles which he said are ‘pretty relevant to the sector’.

These include making the offer in writing and setting out the full potential benefits, while the board receiving the offer must act in the interests of the company and undertake analysis and address the statement of benefits by either accepting or rejecting them under a specific timetable.

He said the standard was policied by practitioners and had not been developed by the regulator.

‘I think the sector could do a lot worse than have a code or something of that nature. There is clearly a gap in the market,’ he said.

Discussing the regulator’s in-depth assessments, Mr Ashby confirmed there are 10 pilots underway, and in five of those the HCA is looking in particular at approaches to value for money.

‘Once we have evaluated the effectiveness of that approach, we will take a decision about whether that augments or changes the way we assess value for money,’ he said.

Mr Ashby said the regulator had an idea of the first 40 associations it wants to undergo in-depth assessments, but it will keep some resources on hand each year to deal with any changes in landlords’ circumstances requiring an inspection.

Mr Ashby said all of the changes he had discussed would be presented in more detail in a new version of regulatory standards which would be published ‘within the next two to three weeks’.