Appendix: Government response
I wrote to you on 25 July, in response to your concerns
about the Regulation Committee of the Homes and Communities Agency,
following Julian Ashby's oral evidence to the CLG Select Committee
on 15 July.
Since this time, I have read the Select Committee's
published report on its inquiry into the work of the Regulation
Committee with interest and have considered its recommendations
carefully.
You will be aware that the Regulator recently announced
the start of its independent review of the Cosmopolitan case.
I fully support this and will await the results keenly.
I agree that it is vitally important that the ratings
on financial viability and governance should be robust, distinct
from each other, and able to be taken at face value. I am satisfied
by the Regulator's response that this is indeed the case. I welcome
the introduction by the Regulator of a "Grades Under Review"
section on its website, which indicates providers whose gradings
may be subject to a downgrade to a non-compliant level. I also
welcome the Regulator's intention to amend the straplines (V3
and V4) indicating non-compliance with the viability standard,
so that they are clearer that the provider has been given a non-compliant
grade. These changes should further strengthen the transparency
of viability and governance ratings.
I welcome your recommendation that the Regulator
work with other regulators to examine their use of statutory powers.
The Regulation Committee includes members with experience of other
regulatory regimes, and I am assured that the HCA has a regular
dialogue with other regulators, including social housing regulators
in the Devolved Administrations. I welcome the HCA's proposal
to review its approach to viability regulation, drawing on learning
from other regulators and other third parties—like credit
rating agencies—that have relevant expertise.
You also recommended that an experienced former regulator
in another sector should review the operation of social housing
regulation. I do not consider that we should take forward any
wide-ranging review of social housing regulation in the near future.
The Regulator faces a challenging agenda in regulating an increasingly
diverse sector; and the reforms to regulation which we instituted
via the 2011 Localism Act are still bedding down. A further review
at this stage could undermine lender confidence in the role of
the regulator.
You raised concerns about the resourcing, capacity
and capability of the Regulator. Earlier this year, my department
gave approval for the Homes and Communities Agency to recruit
additional posts as part of its restructure of the Regulation
Directorate—upgrading its skill set, to ensure that it has
the specialist financial and commercial expertise to respond to
the new challenges in the sector. This process is in train and
I can provide reassurance that we will continue to support the
HCA to ensure that they are adequately resourced with the right
expertise, although this will be within the context of my continuous
drive for improvements in efficiency across the DCLG Group.
You recommended that Government, working with the
sector and the Regulator, should clearly publicise the correct
complaints procedure regarding consumer standards, to avoid misdirected
complaints. I agree that it is important that consumers have complete
clarity on this issue and my department will work with the Regulator
and the Ombudsman to ensure that this happens.
December 2013
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