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Scottish regulator found ‘inappropriate payments’ made by landlord before deregistration
A Scottish housing association was wiped off the register after weaknesses were found in its governance and financial management, including inappropriate payments to committee members, a new report from the Scottish regulator has revealed.
In the report outlining the reasons why it intervened at Kincardine Housing Co-operative, the Scottish Housing Regulator (SHR) found a litany of issues with the management of the association, including “inappropriate payments” to committee members on a number of loss of earnings claims.
It also discovered failures to recognise “serious conflicts of interest” within the organisation and it had no appropriate frameworks to manage them when they did occur.
Kincardine, which owned 72 affordable rent homes in Aberdeenshire, was forced by SHR to transfer its assets to Grampian Housing Association in January, before being removed from the register of social landlords in April. It was the first time in its history that the Scottish regulator had forced a stock transfer.
According to the report, an investigation found that Kincardine had failed to comply with any regulatory standards and weaknesses in its governance and financial management arrangements put tenants at risk.
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SHR also discovered that there was a lack of openness and transparency in the organisation, particularly in relation to expenditure, and criticised the organisation for a lack of engagement with tenants and for not taking them into account when making decisions.
Kincardine was also unable to recruit members to its committee, meaning the committee had fallen below the required seven members, leaving it with a lack of “skills, capability, capacity and challenge” within its management.
The regulator first intervened in the co-operative in 2017 when the committee received no applications after it tendered for a new managing agent.
Kincardine, which had a turnover of £231,887 on 31 March, did not employ any staff directly and therefore relied on agents to manage its homes.
Despite carrying out a number of intervention measures, including appointing a statutory manager and new committee members, the regulator said that Kincardine was “neither willing or able to rectify the weaknesses identified in its governance and financial management arrangements”.
The decision was made to transfer the homes to Grampian after a tenant consultation, in which 70% of respondents voted in favour of the transfer.
Margaret Sharkey, assistant director of regulation at SHR, said: “We intervened to protect tenants’ interests at Kincardine because there were serious weaknesses across almost all aspects of its governance and financial management.
“Kincardine did not have the capacity to address its problems so we consulted tenants about a transfer to another social landlord.
“The majority of tenants who responded to the consultation were in favour of a transfer. We directed a transfer to Grampian Housing Association to make sure tenants’ homes were secure and they continued to receive good services.”
