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A 10,000-home housing association has been judged non-compliant by the English regulator over a pension settlement to a departing executive.
Ongo Homes which has homes in North Lincolnshire and Yorkshire, referred itself to the Regulator of Social Housing after an unnamed executive was allowed to access their pension before it matured.
The regulator said this made the organisations liable for significant discretionary financial costs, and put the reputation of the housing association and the wider sector at risk.
The organisation was given a G3 rating – meaning it does not comply with the regulator’s governance requirements.
In December, the regulator added Ongo Homes to its grading under review list. Matthew Spittles, chair of Ongo Homes, confirmed at the time that the review had been initiated following a voluntary referral by the board.
Today’s judgement said that evidence gathered confirmed weaknesses in governance, and showed that the board had not been managing its affairs with independence, diligence, effectiveness or foresight.
Ongo Homes told Inside Housing that this related to a pension agreement with one of its departing executives, which saw the association pay a pensions authority to allow the executive to access their pension before it had matured.
The 10,000-home association was also criticised for its oversight of decisions made by its parent company, the unregistered Ongo Partnership Ltd, with regard to these discretionary payments.
It said while the decision-making on executive remuneration did not sit with Ongo Homes, there were opportunities for its board to identify and manage risks associated with it.
It added that controls and mechanisms in place to manage risks of this nature, which included the chair of Ongo Homes’ board being a member of the unregistered parent’s board, were not operated effectively.
Despite the governance downgrade, Ongo Homes, which has a turnover of £43m and plans to develop 1,075 homes in the next three years, was found to full comply with the regulator’s financial viability tests. It received a V1 rating for viability.
The regulator said Ongo Homes had an adequately funded business plan, sufficient security in place and is forecast to meet its financial covenants.
Ongo Homes’ last regulatory judgement in November 2017 saw it score V1 for financial viability and G1 for governance.
Mr Spittles said: “We accept the reason why the regulator has taken its decision and undertake to carry out a comprehensive review of our governance.
“We recognise that the decision to agree a pension settlement to a departing executive did not uphold the high standards expected of the social housing sector, and that Ongo Homes’ board members should have identified and managed the risks associated with this.
“On realising this, we voluntarily referred the matter to the regulator.
“Most importantly, we want to reassure our tenants and our stakeholders that this will not impact on the quality of services and support we provide to them.
“It is important to stress the regulator’s assessment of Ongo Homes’ compliance with financial viability remains at V1. This means we remain financially secure and are adequately funded to deliver our business plan.”