Narrative Regulatory Judgement
- Provider: South Liverpool Homes Limited
- Regulatory code: L4230
- Publication date: 30 June 2021
- Governance grade: G2
- Viability grade: V1
- Reason for publication: Governance downgrade
- Regulatory route: In Depth Assessment
This regulatory judgement downgrades our previous published assessment of South Liverpool Homes Limited’s (SLH) governance from G1 to G2 and confirms its existing V1 grade.
SLH continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. However, following an In Depth Assessment (IDA), we have concluded that SLH needs to improve some aspects of its governance arrangements to support continued compliance.
SLH needs to strengthen board oversight of the business and improve its risk management and internal controls assurance framework to ensure it is managing its affairs with sufficient effectiveness and diligence.
Control weaknesses have presented in SLH’s approach to development, rent setting and property allocations. Issues have highlighted that probity arrangements are not working as effectively as they should, to the extent that arrangements risk inappropriately advancing the interests of third parties.
SLH also needs to review its strategic approach to delivering value for money to make more effective use of its financial resources. In addition, the board needs to ensure it has assurance on the completeness of its assets and liabilities register.
SLH is engaging with the regulator in taking action to address the areas of weakness identified through the IDA. It has commissioned a fundamental review of its governance and is currently developing a new strategic plan.
The regulator’s assessment of SLH’s compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. Based on evidence gained from the IDA, the regulator has assurance that SLH’s financial plans are consistent with, and support, its financial strategy. The provider has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a wide range of adverse scenarios.
Other providers included in the judgement
None
About the provider
Origins
SLH is a charitable community benefit society formed in 1999 following a large-scale stock transfer from Liverpool City Council.
SLH’s principal activity is the provision of social housing but it also seeks to contribute to the regeneration of the area in which it operates.
Registered Entities
SLH is the only registered entity.
Unregistered Entities
SLH has one active unregistered entity, Avela Services Limited, which manages an investment in photo-voltaic panels.
A second unregistered entity, SLH Projects, is currently dormant.
Geographic Spread and Scale
SLH operates in South Liverpool, mainly in Speke and Garston. It owns/manages about 3,800 homes.
Staffing and Turnover
SLH’s turnover for the year ended 31 March 2021 was £23.4m. The group employed the full time equivalent of 173 staff. [footnote 1]
Development
During 2021/2022, SLH plans to complete the remaining 28 homes in its current programme. A new development programme of about 200 units over five years is expected to commence in 2022/2023.
About our judgements
Key to Grades
Governance:
- G1 (Compliant): The provider meets our governance requirements
- G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance
- G3 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
- G4 (Non-compliant): The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.
Viability:
- V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
- V2 (Compliant): The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.
- V3 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
- V4 (Non-compliant): The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.
Definitions of Regulatory Processes
In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.
Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.
Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.
Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.
For further details about these processes, please see ‘Regulating the Standards’.
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