Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 21
21
Accepted
Ensure registered providers' boards and executives possess sufficient expertise in their financial models.
Recommendation
Furthermore, the Regulator must ensure that, as part of its governance ratings, it examines whether registered providers’ boards and executive teams have individuals with sufficient expertise in the financial models the provider is using. Registered providers must demonstrate that they properly understand any capital markets and financial products they are exposed to. (Paragraph 101) The result of financial pressure: fewer new homes
Government Response Summary
The government welcomes the recognition of expertise importance, stating that its existing Governance and Financial Viability Standard and Code of Practice already set expectations for board capability and expertise, which are examined during regulatory inspections and inform governance gradings.
Government Response
Accepted
HM Government
Accepted
20. We welcome the committee’s recognition of the importance of providers having individuals with sufficient expertise in the financial models the provider is using. Our Governance and Financial Viability Standard sets out our expectations that providers manage their affairs with appropriate skill and foresight and the assurance we seek on board capability takes account of the level of complexity in the business that the board needs to have oversight of. Our Code of Practice expands on the standard to outline our expectation that providers regularly assess whether boards and management have the right competencies, experience, and technical knowledge appropriate to the size, scale and risk profile of the organisation. We use a variety of mechanisms to gather assurance on this. Our inspections (and previously In Depth Assessments), which cover large for-profit providers, explore this when considering a provider’s governance grading. Our responsive work has also uncovered examples where providers have not demonstrated this and this has been reflected in external publications.