20 April 2001
A report from the public spending watchdog expressed concerns that the corporation's decision to scrap performance standards and introduce a less prescriptive regulatory code could lead to a 'dilution of the high standards of performance, probity and accountability expected from the sector'.
The new code will specify the features of a well-run registered social landlord (RSL), instead of imposing standards. But NAO audit manager Keith Holden, who compiled the report on managing financial risks among RSLs, warned that the corporation needed to decide how to fill the gap created by the removal of performance standards. 'They need to consider how they are actually going to apply the regulatory code. How are they going to hold RSLs to it and measure their compliance?' he said. 'Something else will have to be put in place.'
The NAO also told the corporation it must be bolder in acting on the results of its work and make greater efforts to communicate the results of regulatory reviews to the RSLs concerned. It said the corporation did not always tell RSLs when it found evidence of underlying financial problems in their records. And it found that half of RSLs judged to be in need of supervision remained in that situation for two years, and almost one third for four years.
But the report acknowledged that the corporation was taking steps to reform its regulatory activities in response to the increasing complexity of the housing sector. Auditor general Sir John Bourn, commenting on the report, paid tribute to the corporation's record.
'The corporation has a good record in preventing financial failure in the sector,' he said. 'Although it is reforming its approach, we recommend further steps to protect the interests of taxpayers and tenants.'
A spokeswoman for the corporation welcomed the report, saying: 'Its recommendations are timely as we move forward with implementing our revised regulatory regime. We will want to give careful consideration to the NAO's recommendations, and those of the Public Accounts Committee, as we work through the details over the next few months.'
PFapr2001
