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Clause 187 - Non-profit providers only
534. This clause restricts the application of clauses 188 to 190 to non-profit registered providers as provided for by the regulator's designation on the register under clause 111.
Clause 188 - Industrial and provident society: change of rules
535. This clause re-enacts paragraph 9 of Schedule 1 to the 1996 Act.
536. Subsection (1) provides that this clause applies only to industrial and provident societies.
537. Subsection (2) provides that a society must notify the regulator if it changes either its name or its registered office.
538. Subsection (3) provides that no other amendment of an industrial and provident society's rules is effective unless the regulator has first given consent in writing.
539. Subsection (4) provides that the requirement to send copies of amendments of rules to the Financial Services Authority under section 10(1) of the Industrial and Provident Societies Act 1965 is only satisfied if it is accompanied by a copy of the regulator's consent under subsection (3).
540. Subsection (5) provides that this clause shall be treated as if it were part of the Industrial and Provident Societies Act, as well as this Bill.
Clause 189 - Charity: change of objects
541. This clause re-enacts paragraph 10 of Schedule 1 to the 1996 Act.
542. Subsection (1) provides that this clause applies only to registered charities that are not registered companies.
543. Subsection (2) provides that the Charity Commission must first consent in writing to any amendment of the charity's objects if such a change is to be effective.
544. Subsection (3) provides that the Charity Commission must consult the regulator before giving consent under subsection (2).
Clause 190 - Companies: change of articles
545. This clause re-enacts paragraph 11 of Schedule 1 to the 1996 Act.
546. Subsection (1) provides that this clause applies only to registered companies.
547. Subsection (2) provides that a company must notify the regulator if it changes either its name or its registered office.
548. Subsection (3) provides that no amendment of a company's articles of association is effective unless the regulator has first given consent in writing.
549. Subsection (4) provides that the requirement to send copies of resolutions to the registrar of companies under section 30 of the Companies Act 2006 is only satisfied if it is accompanied by a copy of the regulator's consent under subsection (3). Failure to comply with the requirement to send copies of resolutions under section 30 of the Companies Act 2006 is an offence.
Guidance
Clause 191 - General
550. This clause gives the regulator the power to give guidance to registered providers. The clause does not specify limitations as to the scope or content of such guidance.
551. Guidance is not binding on registered providers, but the regulator may have regard to compliance with guidance by registered providers when exercising, or contemplating the use of, its powers under Chapters 6 and 7 of this Part
Clause 192 - Use of intervention powers
552. The regulator must produce guidance for registered providers on how it uses, and intends to use the powers that it has under the provisions of Chapters 6 and 7. It will have regard to this guidance in using those same powers.
553. This provision reflects the relevant requirement of the Regulators' Compliance Code issued under the Legislative and Regulatory Reform Act 2006.
Clause 193 - Consultation
554. Before giving guidance under clause 191, the regulator must consult bodies representative of registered providers, bodies representing the interests of the tenants of social housing, and the HCA.
Managers of social housing
Clause 194 - Accreditation
555. This clause allows the regulator to operate a scheme for the purpose of accrediting persons who provide services in connection with the management of social housing.
556. Subsection (2) provides that the regulator may approve a scheme operated by someone else - a trade body for example. Subsection (3) provides that approval may be withdrawn.
557. Subsection (6) providers that standards under clause 173 may require a registered provider to ensure that anyone providing services in connection with the management of its social housing is accredited.
Chapter 7 - Enforcement powers
Enforcement notice
558. Clauses 195 to 202 describe the regulator's power to issue an enforcement notice.
Clause 195 - Overview
559. This clause describes what an enforcement notice is. It is to require a registered provider to do (or not do, or to stop doing) certain things in order to resolve specified failures or other problems.
Clause 196 - Grounds for giving notice
560. This clause specifies the grounds on which the regulator may give an enforcement notice. Subsection (1) specifies that the regulator must be satisfied that one of the grounds for issuing an enforcement notice applies and that an enforcement notice is the appropriate intervention power to use, whether alone or as a potential precursor to further action. As the regulator must be satisfied that there are grounds to use an enforcement notice, it will have to have established the facts to a degree that justifies it directing a registered provider to act in a specified way.
561. Subsections (2) to (7) specify the cases where an enforcement notice is applicable as required by subsection (1)(a) as follows:
- that a registered provider has failed to meet a standard of social housing established by the regulator under clauses 173 or 174,
- that the affairs of a registered provider have been mismanaged,
- that it is required to protect the interests of tenants,
- that it is necessary to protect the assets of a registered provider,
- that a registered provider has failed to comply with an undertaking that it has given to the regulator as provided for in clause 121,
- that an offence under this Part has been committed by a registered provider.
562. Subsection (8) provides that where the regulator is satisfied that an offence has been committed in respect of a registered provider by an individual, the grounds for imposing an enforcement notice are as in subsection (7), and the regulator may serve an enforcement notice on the individual rather than the provider. This subsection also provides that, in such cases, references in this Part of the Bill to registered provider can be read as references to that person.
Clause 197 - Content
563. This clause sets out what an enforcement notice must include. It must specify which of the cases in clause 196 are the grounds for the enforcement notice, the specific action which the registered provider must take which is the substance of the notice, the date by when the specified action must be taken, and the effect of clauses 200 to 202.
Clause 198 - Warning
564. This clause sets out a warning procedure which it calls a "pre-enforcement warning". This process must be carried out before an enforcement notice as specified in clause 197 can be issued. This warning must be given to the registered provider, and must:
- set out the grounds which the regulator is satisfied are the basis for an enforcement notice,
- warn the provider that the regulator is considering issuing an enforcement notice in respect of the matters which form the grounds for the notice,
- specify the action that the enforcement notice may require the registered provider to take, and
- explain the effect of clauses 199 to 202, which detail arrangements for:
a) making representations,
c) withdrawal of an enforcement notice, and
d) sanctions for breach of an enforcement notice.
565. The regulator must send a copy of the warning issued under this clause to the HCA, and any other person or body whom it thinks appropriate. In respect of the latter, subsection (3) requires that the regulator will give particular consideration to any person who has provided information that has directly or indirectly established the grounds for giving the warning.
566. The warning must also draw to the attention of the registered provider the provisions of clause 121 which permit the regulator to consider and accept voluntary undertakings from registered providers, and to indicate whether, and to what extent, such a voluntary undertaking relevant to the failing specified in the warning would be accepted instead of, or in mitigation of, the actions which the regulator is considering specifying in an enforcement notice.
567. Subsection (5) provides that a notice under this section may be combined with notices under other sections that give the regulator other types of intervention power. The effect of this is that the regulator may, where appropriate, consider using more than one intervention power to deal with a failing by a registered provider.
Clause 199 - Representations
568. In addition to the contents of an enforcement notice specified in clause 197, this clause requires the pre-enforcement warning to specify a minimum period during which the registered provider who has been served with a warning under clause 198 may make written representations to the regulator.
569. Subsection (2) specifies that the minimum period will be at least 28 days, beginning on the date on which the registered provider receives the pre-enforcement warning.
570. At the end of the period the regulator will consider any such written representations and decide whether it will issue an enforcement notice or not.
Clause 200 - Appeal
571. This clause provides that a registered provider who has been served with an enforcement notice may appeal against it to the High Court.
Clause 201 - Withdrawal
572. This clause gives the regulator the power to withdraw an enforcement notice at any time by giving written notice to the registered provider on whom the enforcement notice has been served.
Clause 202 - Sanction
573. Subsection (1) gives the regulator the power to consider the use of its other intervention powers if the registered provider has not complied with the contents of an enforcement notice that the regulator has issued.
574. Subsection (2) provides that where the enforcement notice has been served on a person under clause 196 subsection (8), the regulator may only either use the powers to require the payment of a fine as set out in clauses 203 to 212, or take steps to instigate a prosecution in relation to the offence which provided grounds for service of the enforcement notice.
575. Subsection (3) provides that a person who has been served with an enforcement notice under clause 196(8) may be prosecuted for the offence which gave grounds for the enforcement notice only if they have not complied with that enforcement notice.
Penalty
Clause 203 - Overview
576. This clause describes the power to impose fines to penalise failures by registered providers.
Clause 204 - Grounds for imposition
577. This clause specifies the grounds on which the regulator may decide to require registered providers to pay fines. As well as being satisfied that one of the grounds specified in this clause applies, the regulator must also be satisfied that a fine is the appropriate penalty for the identified problem.
578. Subsections (2) to (6) of this clause specify the cases where the regulator may issue a fine. These cases are where:
- the registered provider has failed to meet a standard of social housing established under clauses 173 or 174,
- the affairs of the registered provider have been mismanaged,
- the registered provider has failed to comply with an enforcement notice,
- the registered provider has failed to comply with an undertaking that it has given to the regulator, and
- where offences under this Part of the Bill have been committed by the registered provider.
579. Subsection (7) provides that where the regulator is satisfied that an offence has been committed in respect of a registered provider by an individual, the grounds for imposing a penalty are as in subsection (6), and the regulator may require the individual rather than the provider to pay the fine. This subsection also provides that, in such cases, references in this Part of the Bill to a registered provider can be read as references to that person.
580. Subsection (8) requires that the regulator must be satisfied beyond reasonable doubt in respect of the grounds at subsection (6).
Clause 205 - Imposition
581. This clause provides that a penalty is imposed by a written notice being served on a registered provider. Subsection (2) requires the notice to specify which of the cases listed in subsections (2) to (6) of clause 204 is the basis for the notice, the amount of the penalty that must be paid, and the deadline for the payment of that fine.
582. Subsection (3) provides for the Secretary of State to make further regulations about the period for payment of fines, the content of the penalty notice and the way in which a penalty notice may be served.
Clause 206 - Impact
583. This clause sets out matters that the regulator must take into account when considering whether a registered provider should pay a penalty. These matters are the financial condition of the registered provider and the impact that any fine may have on the provider's ability to provide services. The regulator's considerations of these matters will particularly seek to avoid jeopardising a registered provider's financial viability or its ability to honour financial commitments it has made, or pre-empting the financial resources it requires to remedy the failures which are the grounds on which the penalty is being considered.
Clause 207 - Amount
584. Subsection (1) provides that the regulator must consider the matters set out in clause 206(2) to (4) when deciding on the level of the fine.
585. Subsection (2) provides that the amount of the fine for a case covered by the ground in clause 204(6) may be no more than the maximum amount that the court could impose in those cases.
586. Subsection (3) specifies that, other than where the ground for imposition is set out in clause 204(6), the maximum amount of penalty that the regulator may impose is £5,000.
587. Subsection (4) gives the Secretary of State the power to amend the maximum penalty specified in subsection (5) by order.
Clause 208 - Warning
588. This clause sets out a warning procedure which it calls a "pre-penalty warning". This process must be carried out before a fine can be imposed by a penalty notice as set out in clause 205. The pre-penalty warning must be given to the provider concerned and must include the following-
- the grounds which the regulator is satisfied are met and are the basis for the fine,
- a warning that the regulator is considering imposing a fine on the specified grounds,
- an indication, if the regulator is able to give one, of the likely amount of the fine,
- an explanation of the arrangements specified in clauses 209 to 212 for:
a) making representations concerning the contents of the warning,
b) what is done with the proceeds of the fine,
c) how a penalty notice may be enforced; and
Clause 209 - Representations
589. This clause allows providers issued with a warning to make representations to the regulator about its proposed action. The warning issued under clause 208 must provide for a minimum period for the provider to make representations to the regulator.
590. Subsection (2) specifies that the minimum period will be at least 28 days, beginning on the date on which the registered provider receives the pre-penalty warning.
591. The representations may pertain to any matter connected with the contents of the warning, but in particular with whether a fine should be imposed, or the likely amount of the fine.
592. Subsection (4) provides that at the end of the period for representations the regulator must consider any representations that have been made, and then decide whether to impose the fine.
Clause 210 - Destination
593. This clause specifies what the regulator must do with money that it receives from fines it has imposed on registered providers. Subsection (2) provides for the regulator to deduct from that money the direct costs of administering the penalty procedure, and a share of its overall expenditure that is proportionate to the effort and resource required for administration of the penalty procedure. Subsection (3) provides that any balance remaining will be paid to the HCA to be used, at the HCA's discretion, for investment in social housing.
Clause 211 - Enforcement
594. This clause specifies how fines will be enforced, and makes provision for late payment or non-payment of fines. Fines are treated as a debt to the regulator once a penalty notice is issued under clause 205.
595. Subsection (2) gives the Treasury a power to make regulations permitting the regulator to charge interest on fines that are not paid by the date specified in the penalty notice and to impose additional fines where the original fine is not paid by the specified deadline. In such cases, subsection (3) provides that the additional sums are also treated as fines, and that these additional amounts may have the effect of increasing the penalty above the limit set by clause 207.
596. Subsection (4) provides for how interest rates may be set for interest charges on late payment of penalties as provided for in subsection (2).
597. Subsection (5) gives a discretionary power to the regulator to offer an early payment discount if the provider pays the fine in advance of the date specified in the penalty notice.
598. Subsection (6) specifies that if the penalty notice is served on a person under clause 204 subsection (7), he or she may not be prosecuted for the offence which is the ground for requiring the payment of a fine.
Clause 212 - Appeal
599. This clause gives a provider who has been served with a penalty notice the right to appeal to the High Court against the regulator's imposition of the penalty, or its amount, or both.
Compensation
600. Clauses 213 to 221 describe the arrangements for the regulator to exercise a power to require a registered provider to pay compensation to certain classes of people.
Clause 213 - Overview
601. This clause describes the nature of the power to require a registered provider to pay compensation.
Clause 214 - Grounds for award
602. This clause specifies the grounds on which the regulator may require a registered provider to pay compensation. The regulator must be satisfied either that the registered provider has failed to meet a standard of social housing established by the regulator under clauses 173 or 174 of this Part, or that the registered provider has failed to comply with an undertaking that it has given to the regulator.
603. The regulator must also be satisfied that requiring a registered provider to pay compensation is appropriate, whether alone or in combination with the use of one or more of the regulator's other enforcement powers.
Clause 215 - Nature
604. This clause indicates those circumstances under which compensation may be awarded. Subsection (1) provides that it should be awarded to a person or persons who have suffered as a result of the failure that forms the basis for awarding compensation as defined by clause 214.
605. Subsection (2) restricts the person or persons eligible for compensation to those who are tenants or occupiers of social housing, but provides that compensation can be made to individual tenants or occupiers of a registered provider, or to groups of them, or to all of a provider's tenants or occupiers.
Clause 216 - Social housing ombudsman compensation
606. This clause provides for the regulator's power to require a provider to pay compensation to be co-ordinated with the arrangements for approved ombudsman schemes. All registered providers must be a member of an approved ombudsman scheme under clause 120 and those schemes may provide for the ombudsman to determine that one of its members should pay compensation in respect of a case brought by an individual against that member.
607. Subsection (1) provides that where this is the case, the regulator may not direct a registered provider to pay compensation to the same person for the same reason.
608. Subsection (2) however permits the regulator to direct the provider to pay compensation in such cases where the ombudsman has awarded compensation, but the provider has not paid it.
Clause 217 - Imposition
609. This clause specifies the process and content for imposing a direction to a provider to pay compensation. The direction to pay compensation is done by the regulator giving a written notice, which is called a "compensation notice", both to the registered provider who must pay the compensation, and to the person or persons who are to be compensated.
610. Subsection (2) provides that compensation notices must set out:
- the grounds on which compensation is awarded, which must be one or more of the grounds specified in clause 214,
- the amount of the compensation award,
- the person or persons who are to be compensated, and
- the period within which that compensation must be paid.
611. Subsection (3) requires the Secretary of State to make regulations about the period within which compensation must be paid, and gives the Secretary of State the power to make regulations about the form and content of compensation notices and the manner in which a compensation notice may be given.
Clause 218 - Warning
612. This clause sets out a warning procedure which it calls a "pre-compensation warning". This process must be carried out before compensation can be imposed by a compensation notice as set out in clause 217. Subsection (1) requires that the pre-compensation warning must be given to the registered provider concerned and must include the following-
- the grounds which the regulator is satisfied are met and are the basis for awarding compensation,
- a warning that the regulator is considering awarding compensation to specified persons,
- an indication, if the regulator is able to give one, of the likely amount of the compensation award,
- an explanation of the arrangements specified in clauses 219 to 221 for:
o making representations concerning the contents of the warning,
o how a compensation notice may be enforced; and
613. Subsection (2) requires the regulator to give the HCA, and any other person that it thinks appropriate, a copy of the pre-compensation warning. In doing so, it should particularly take into account, when considering to whom it would be appropriate to send a copy, any person who has provided information as a result of which the regulator is considering making an award of compensation.
614. Subsection (4) provides that the regulator may combine the pre-compensation warning with warnings about the use of its other enforcement powers.
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