London borough refers tenant management organisation to Financial Conduct Authority

A council statement said Lambeth complained the council’s legal powers were too limited to respond fully to “significant governance, financial and management concerns raised by residents” about the Loughborough Estate Management Board (LEMB), which manages an estate at Loughborough Junction on behalf of residents.

An audit report to the council found issues over financial management, governance, procurement and value for money.

It also identified spending on foreign travel and gifts “without adequate justification”.

Lambeth said it was working on a review, but under current legislation on tenant management organisations this had to be agreed with LEMB, or go to arbitration, before the contents could be shared with residents.

The council said it was pressing for more powers to take action when concerns are raised about poorly performing TMOs, “given the significant public funds that they control and the hundreds of thousands of residents nationwide whose homes and estates are managed by them”, but said it was heavily constrained by current legislation.

A ballot by residents earlier this year to not continue with the management by LEMB has not been able to be progressed because of this, the council said.

There is also a dispute over a letter sent by LEMB to residents “which made unsubstantiated allegations regarding safety and threatening behaviour, and a decision to move the AGM for the estate online which is not permitted under LEMB’s own rules”. Lambeth has since offered its own offices as an AGM venue.

Danny Adilypour, Lambeth’s deputy leader and cabinet member for housing, investment and new homes, said: “We are using every avenue we have available to act on this, including referrals to the Financial Conduct Authority, lobbying the government and continuing to engage in legal discussions with the LEMB to ensure they adhere to their management agreement.

“Ultimately, councils have limited powers to help residents when difficulties arise with TMOs. This isn’t right and we need urgent reform so that communities are guaranteed good housing management and governance by TMOs, so they can be assured that their rents and service charges are being well spent.”

The LEMB has been contacted for comment.

Mark Smulian