Housing association hit by resignations and rating downgrade over governance

A “fundamental breakdown in trust” has seen a stock transfer housing association’s governance rating downgraded by the Homes and Communities Agency (HCA).

Two senior executives have resigned and a new board is now in office.

Saffron Housing Trust was formed in 2004, initially as the stock transfer landlord for 4,300 homes formerly owned by South Norfolk Council.

It now owns and manages more than 5,000 homes and has an annual turnover of £29.3m.

The HCA said that in 2011 it became known that some board members had not been appointed properly, raising “uncertainty about the validity of all the decisions that had been made at those meetings”, which would have been inquorate had the improperly appointed members not been counted.

But it failed to tell the HCA about the problem until June 2016, after which the new board in September held a quorate and properly constituted meeting to ratify all the decisions made at the earlier meetings.

The HCA said in its regulatory judgment that social landlords were “required to communicate in a timely manner with the regulator on material issues that relate to non-compliance or potential non-compliance with standards”.

Although Saffron had since June sought to regularise its governance, “this does not detract from the fact that it failed to inform the regulator when the issue first came to light.

“Saffron’s failure to work openly with the regulator represents a fundamental breakdown in trust which has subsequently been compounded over a period of several years.

“The regulator’s current non-compliant judgement reflects the scale, impact and duration of Saffron’s historic failures.”

Catherine Guelbert, the trust’s non-executive chair, said: “We fully acknowledge the HCA’s comments and decision to downgrade Saffron’s governance rating to G3 based on recently-identified governance issues.”

She said the main problem concerned appointments of independent board members and “the impact this had on the validity and quoracy of board meetings between 2011-15.”

Guelbert said the new board had “moved swiftly to ensure the situation is rectified” and had launched an investigation into how the problem arose.

Chief executive Adam Ronaldson, and housing and finance director Stephen Flowitt-Hill have both resigned and new business director John Whitelock is acting as chief executive.