House of Lords - Explanatory Note

Housing And Regeneration Bill - continued	House of Lords

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Clause 119 - De-registration: voluntary

268. Subsection (1) allows registered providers to ask the regulator to remove them from the register.

269. Subsection (2) gives the regulator the power to comply with a request under subsection (1) where one or more of the specified conditions applies as follows:

the registered provider no longer is, or does not intend to continue to be, a provider of social housing in England

the registered provider is subject to regulation by another authority whose control the regulator believes to be sufficient, or

in accordance with such other criteria as the regulator has published in respect of de-registration, in accordance with subsection (7).

270. Subsection (3) requires the regulator to consult relevant local authorities (as defined in the Housing Associations Act 1985) in whose area the registered provider carries out its activities as it considers appropriate, before deciding whether or not to comply with a request under subsection (1).

271. Subsection (4) provides that the regulator may not consent to a de-registration application from a non-profit registered provider if it considers it is sought with a view to enabling the body to distribute assets to its members.

272. Subsection (5) requires the regulator, when considering whether to grant a request to de-register by a registered provider (profit-making or non-profit), to have particular regard to any conditions the regulator has placed on disposals of land (for example relating to the use of disposal proceeds) and any conditions of grant.

273. Subsection (6) provide that the regulator must notify the registered provider, and any local authority consulted, of its decision.

274. Subsection (7) provides that the regulator must publish criteria on the additional grounds that a registered provider may de-register.

Clause 120 - Notice

275. This clause requires the regulator to take certain actions as soon as reasonably possible after it has registered or deregistered a body. These actions are to notify other registrars who have related duties or powers depending on the constitutional form of the body that the regulator has registered or de-registered. Therefore, the regulator notifies:

the Charity Commission, if the registered provider is a registered charity,

the Financial Services Authority, if the registered provider is an industrial and provident society,

the registrar of companies for England and Wales, if the registered provider is a registered company.

276. Subsection (2) provides that in notifying these bodies, the regulator will advise whether the body has been registered with a profit-making or non-profit designation under clause 115(1).

277. Subsection (3) provides that if the regulator changes the designation under clause 115(8), the regulator will also advise the relevant bodies.

278. Subsection (4) provides that a person to whom notice is given by the regulator under this clause must keep a record of that notice.

Clause 121 - Appeal

279. Subsection (1) gives a body the right of appeal to the High Court against a decision of the regulator:

to refuse to register that body

to deregister that provider

to refuse to deregister that provider.

280. Subsection (2) prohibits the regulator from de-registering a body while an appeal to the High Court is pending.

Chapter 4 - Registered providers

General provisions

Clause 122 - Payments to members etc.

281. This clause derives from paragraph 1 of Part 1 of Schedule 1 to the 1996 Act.

282. Subsection (1) restricts the making of gifts and the payment of dividends and bonuses by a non-profit registered provider to -

a member or former member of the registered provider,

a member of the family of a member or former member,

a company which has as a director such a person.

283. Subsection (2) states that gifts may only be made, or dividends of bonuses paid if it falls within the three classes defined in subsections (3) to (5).

284. Subsections (3) to (5) directly replace paragraphs 1(2)(a) to (c) of the Part mentioned above.

285. Subsection (6) states that if a registered company or industrial and provident society contravenes this clause -

it may recover the wrongful gift or payment as a debt from the recipient; and

the regulator may require it to take action to recover the gift or payment.

Clause 123 - Disposal of property

286. This clause cross-refers to the provisions in Chapter 5 (disposal of property).

Clause 124 - Complaints

287. This clause specifies that the Housing Ombudsman schemes, as established by section 51 of, and Schedule 2 to the 1996 Act, continue to have effect, with the consequential amendments specified.

Clause 125 - Voluntary undertaking

288. This clause sets out the nature of voluntary undertakings made to the regulator by registered providers.

289. Subsection (1) provides that a registered provider may give an undertaking in respect of any matter concerning social housing.

290. Subsection (2) provides that the regulator may prescribe a procedure to be followed in giving an undertaking.

291. Subsections (3) and (4) provide that the regulator must have regard to any undertaking made in this way by a registered provider when exercising a power under Chapters 6 or 7 of this Part of the Bill. The regulator may also take into account the extent to which undertakings having been made in this way by a registered provider, have been honoured by the provider, when deciding whether to exercise powers under Chapters 6 or 7.

292. One of the purposes of this provision is to enable registered providers to formally notify the regulator of actions that they propose to take, and believe are necessary to ensure that their affairs are managed in accordance with the standards set by the regulator under clauses 191 and 192. It provides a mechanism by which such commitments can be brought to the attention of the regulator, and require the regulator to take account of those undertakings when determining whether to investigate the performance of providers, and to take enforcement action where providers have not complied with regulatory requirements.

Clause 126 - Sustainable community strategies

293. This clause specifies that a registered provider must co-operate with a local authority if invited to participate in the preparation or modification of a sustainable community strategy under section 4 of the Local Government Act 2000.

Accounts

294. Clauses 127 to 143 broadly replicate in Part III of Schedule 1 to the 1996 Act (as amended by paragraphs 17 to 23 of Schedule 11 to the Housing Act 2004).

Clause 127 - Directions

295. Subsections (1), (2) and (3) give the regulator the power to give directions to registered providers about the preparation of accounts for the purpose of ensuring that accounts are prepared in a proper form and that they present a true and fair view of a registered provider's state of affairs as far as it concerns social housing, including its present and past social housing assets and funds. This replaces paragraph 16(1) of Schedule 1 to the 1996 Act. A direction may be given to a profit-making registered provider only in so far as its accounts relate to social housing activities.

296. Subsection (4) provides that a direction may provide specifically for how registered providers that are charities should distinguish in their accounts between social housing activities and other matters. This replaces paragraph 16(2) of Schedule 1 to the 1996 Act.

297. Subsection (5) provides that directions under this power may make general provision, or provision specific to particular cases, and that provision may vary according to different cases or types of provider.

298. Subsection (6) provides that where directions relate to more than one provider, those directions must first be consulted on by the regulator with bodies appearing to represent the interests of registered providers. Subsection (7) requires the regulator to make arrangements to ensure that providers to whom directions apply are made aware of their requirements.

Clause 128 - Submission to regulator

299. This clause replaces paragraphs 16(5) to 16(8) of Schedule 1 to the 1996 Act. It requires all registered providers to send a copy of their accounts to the regulator within six months of the end of the year to which they relate. These accounts must be accompanied by an auditor's report, or, if an enactment requires a report other than an auditor's report, that other report. The report must specify whether the accounts comply with any relevant directions under clause 127.

Clause 129 - Companies exempt from audit

300. This clause applies in relation to a registered provider which is a registered company, other than a registered charity, which is exempt from the audit requirements of the Companies Act 2006 by virtue of section 477 of that Act, because it is a small company. Registered providers in this category must cause an accountant's report to be prepared, in accordance with clause 130 and made to the company's members in respect of the company's individual accounts for any financial year in which the company takes advantage of its exemption from audit. 'Individual accounts' has the same meaning as in section 396 of the Companies Act 2006.

Clause 130 - Exempt companies: accountant's report

301. Subsection (1) of this clause specifies that the report required by clause 129 must be prepared by a reporting accountant eligible under clause 131.

302. Subsection (2) requires the report to state whether the individual accounts are in accordance with the company's accounting records kept under section 386 of the Companies Act 2006.

303. Subsection (3) requires that on the basis of information contained in the accounting records the report must also state whether the accounts comply with Part 15 of the Companies Act 2006, and whether the company is entitled to exemption from audit under section 477 of that Act (small companies' exemption) for the year in question.

304. Subsection (4) requires that the report must give the name of the reporting accountant and be signed and dated. Subsection (5) requires that the report is signed by the reporting accountant (where it is an individual) or an authorised person (where the reporting accountant is a firm). Subsection (6) defines the meaning of 'firm'.

Clause 131 - Exempt companies: reporting accountant

305. This clause specifies who is eligible to act as a reporting accountant for a company. Under subsections (1) to (3), a person is eligible if the person is not prohibited from acting as an auditor and is:

a) a member of one of the professional accountancy bodies listed in subsection (4) and under its rules entitled to engage in public practice and not ineligible for appointment as a reporting accountant, or

b) subject to the rules of one of the professional accountancy bodies listed in subsection (4) in seeking appointment or acting as a statutory auditor under Part 42 of the Companies Act 2006, and under those rules is eligible for appointment as a statutory auditor.

306. Subsection (4) lists the professional accountancy bodies mentioned in subsections (1) to (3). Subsection (5) allows the Secretary of State to amend the list by Order.

307. Subsection (6) defines the rules of those bodies, which are rules which the body has power to enforce and which are relevant for the purposes of Part 42 of the Companies Act 2006 (statutory auditors) or this clause.

308. Subsection (7) specifies that an individual or a firm may be appointed as a reporting accountant; and that section 1216 of the Companies Act 2006 applies to the appointment of a partnership constituted under the law of England and Wales, Northern Ireland, or any other country or territory in which a partnership is not a legal person.

Clause 132 - Application of Companies Act

309. This clause specifies the provisions of the Companies Act 2006 which apply to the reporting accountant and to the report as they apply to an auditor of the company and an auditor's report on the company's accounts (with any necessary modifications). The provisions, listed in subsection (2) are.

(a) sections 423 to 425 (duty to circulate copies of annual accounts),

(b) sections 431 and 432 (right of member or debenture holder to demand copies of accounts),

(d) sections 441 to 444A (duty to file accounts with registrar of companies),

(e) section 454(4)(b) and regulations made under that provision (functions of auditor in relation to revised accounts),

(f) sections 499 to 502 (auditor's right to information), and

(g) sections 505 and 506 (name of auditor to be stated in published copies of report).

310. Subsection (3) specifies that in sections 505 and 506 of the Companies Act 2006 as they apply by virtue of this clause in a case where the reporting accountant is a firm, any reference to the senior statutory auditor shall be read as a reference to the person who signed the report on behalf of the firm.

Clause 133 - Exempt companies: extraordinary audit

311. This clause applies where, in accordance with clause 129 a company appoints a reporting accountant to prepare a report in respect of its accounts for any year. The regulator may require the company to cause a qualified auditor to audit its accounts and balance sheet for that year, and to send a copy of the report to the regulator by a specified date. A requirement may not be imposed before the end of the financial year to which it relates. Subsection (4) of the clause also defines 'qualified auditor' in relation to a company.

Clause 134 - Non-audited industrial and provident society

312. This clause replaces paragraph 17 of Schedule 1 to the 1996 Act. Subsection (1) provides that this clause applies only to industrial and provident societies. Subsection (2) provides that an accountant's report is required even where the society's turnover does not exceed a sum specified in the Friendly and Industrial and Provident Societies Act 1968, that would otherwise allow the society to disapply the requirement for an accountant's report.

313. Subsections (3) and (4) give the regulator a power to require the society to appoint a qualified auditor to audit their accounts, and to send to the regulator a copy of the auditor's report, when the society has disapplied the requirement to appoint a qualified auditor under section 4A of the Friendly and Industrial and Provident Societies Act 1968. The regulator may only use this power in the year following the year to which the accounts relate.

314. Subsection (5) defines "qualified auditor" and "year of account" for the purposes of this clause.

Clause 135 - Charity

315. This clause replaces part of paragraph 18 of Schedule 1 to the 1996 Act.

316. Subsection (1) specifies that this clause relates to non-profit registered providers that are registered charities. Subsection (2) requires such providers to keep accounting records and maintain systems of control in relation to housing activities.

317. Subsection (3) requires such providers to prepare a revenue account giving a true and fair view of its housing activities and a balance sheet giving a true and fair view of its activities as a whole for each accounting period. Subsection (4) requires that the reports specified in subsection (3) must be signed by at least two of the provider's directors or trustees.

318. Subsection (5) defines "period of account" for the purposes of this clause.

319. Subsection (6) specifies that this clause does not override other provisions relating to charity accounts in the Charities Act 1993.

Clause 136 - Charity: audit

320. This clause replaces part of paragraph 18 of Schedule 1 to the 1996 Act (as amended by paragraph 20(4) of Schedule 11 to the Housing Act 2004).

321. The purpose of this clause is to define whether a charity must appoint an auditor to produce a report under clause 137 or a reporting accountant to produce a report under clause 138 on the accounts required under subsection (3) of clause 135.

322. Subsection (2) specifies that if either of the conditions specified in subsection (4) or subsection (5) are met, then the requirements for an auditor's report under clause 137 apply. Otherwise, the requirements for an accountant's report under clause 138 apply.

323. Subsection (4) is the first condition which is that the charity's gross income in relation to housing activities for a period exceeds the amount specified in section 43(1)(a) of the Charities Act 1993.

324. Subsection (5) is the second condition which is that the charity's gross income in relation to housing activities for a period is greater than the amount specified in section 43(1) of the Charities Act 1993, and that, at the end of that period, the aggregate value of assets (before deduction of liabilities) that relate to housing is greater than the sum specified in section 43(1)(b) of the Charities Act 1993.

325. Subsections (6) and (7) define "gross income" and "qualified person" for the purposes of this clause.

Clause 137 - Charity: auditor's report

326. This clause replaces part of paragraph 18 of Schedule 1 to the 1996 Act.

327. Where an auditor has been appointed under either clause 136 or 139, the auditor's report on the charity's accounts must meet the requirements of this clause.

328. Subsection (2) requires that the report must state whether the revenue account gives a true and fair view of the charity's income and expenditure in relation to its housing activities, and whether the balance sheet also gives a true and fair view of the charity's state of affairs at the end of the period to which it relates.

329. Subsection (3) requires the report to give the auditor's name and for it to be signed.

330. Subsection (4) specifies that the auditor will carry out such investigations as are necessary to reach an opinion on whether the charity has complied with clause 130 (2), and whether the accounts are consistent with the accounting records that the charity is required to keep.

331. Subsection (5) requires the auditor to state in the auditor's report if the opinion arising from investigations under subsection (4) is that the requirements specified there have not been complied with.

332. Subsection (6) requires that where the auditor has not obtained all of the information or explanations that the auditor thinks necessary for the purposes of the audit, this must be stated in the auditor's report.

Clause 138 - Charity: accountant's report

333. This clause replaces paragraph 18A of Schedule 1 to the 1996 Act.

334. The clause specifies the requirements for an accountant's report on the charity's accounts as required by clause 136(3).

335. Subsection (2) specifies that the report must say whether the accounts are consistent with the accounting records of the charity. Subsection (3) specifies that the report must say whether, on the basis of the accounting records, the accounts comply with the requirements of the Charities Act 1993 and that the basis on which an accountant's report rather than an auditor's report is permitted, as set out in clause 136, has been correctly established.

336. Subsection (4) requires the report to give the reporting accountant's name and for it to be signed.

337. Subsection (5) requires that where the reporting accountant has not obtained all of the information or explanations that the reporting accountant thinks necessary for the purposes of the report, this must be stated in the report.

Clause 139 - Charity: extraordinary audit

338. Where under clause 136(3) the charity is required to appoint a reporting accountant, this clause provides that the regulator has the power to require the charity also to appoint a qualified auditor to audit the accounts, and to send to the regulator a copy of the auditor's report. The regulator may only use this power in the year following the year to which the accounts relate.

339. Subsection (4) defines "qualified person" and "period of account" for the purposes of this clause.

Clause 140 - Charity: auditor's powers

340. This clause requires that a charity must give a person appointed to prepare a report on the charity's accounts under clause 136 or 139, whether they are an auditor or a reporting accountant, access to documents that relate to the charity's social housing activities, and must provide to that person such information or explanation as they require

Clause 141 - Offences

341. This clause replaces certain aspects of paragraph 19 of Schedule 1 to the 1996 Act.

342. Subsection (1) specifies certain offences in relation to the accounting requirements.

343. Subsection (4) specifies that where one of the offences in subsection (1) is committed by a registered provider, then every officer of the registered provider is guilty of an offence. Subsection (5) specifies that it is a defence for an officer to show that he or she has done everything that could be reasonably expected to ensure compliance by the registered provider.

344. Subsection (6) provides that a person guilty of an offence under this clause is liable on summary conviction to a fine not exceeding level 5 (currently £5000) on the standard scale.

345. Subsection (7) provides that proceedings for the offences under this clause may only be brought by, or with the consent of, either the regulator or the Director of Public Prosecutions.

Clause 142 - High Court

346. This clause replaces sub-paragraph (5) of paragraph 19 of Schedule 1 to the 1996 Act.

347. Where a registered provider has failed to do one of the things listed in clause 141(1), the regulator may apply to the High Court for an order for the purpose of remedying the failure. A High Court order for this purpose may make provision for costs.

Clause 143 - Disclosure

348. This clause replaces paragraph 19A of Schedule 1 to the 1996 Act, concerning the disclosure of information by auditors and reporting accountants.

349. Subsection (1) specifies that this clause applies to information that a person has received while acting either as an auditor or a reporting accountant of a registered provider.

350. Subsection (2) permits persons in receipt of information as described in subsection (1) to disclose that information to the regulator for a purpose connected with the regulator's functions even if there is otherwise a duty of confidentiality on those persons, and regardless of whether or not the regulator has requested the information.

351. Subsection (3) clarifies that disclosure of information in this way includes expression of an opinion on that information.

352. Subsection (4) defines "reporting accountant" for the purposes of this clause.

Prepared: 2 April 2008