Notifiable events

Introduction and purpose

1.1

This guidance sets out the events that Registered Social Landlords (‘RSLs’) must tell us about. It explains why we have a regulatory interest in these events, what RSLs must notify us about, and what we will do with the information RSLs give us. We are interested in events which may put at risk:

• the interests or safety of tenants, people who are homeless and other service users;
• the financial health of the RSL, public investment in the RSL, or the confidence of private lenders; or
• the good governance and reputation of an individual RSL or the RSL sector.

1.2

The Housing (Scotland) Act 2010 (‘the 2010 Act’) also requires that RSLs notify us about certain disposals of land and assets, and constitutional and organisational changes. We make reference to these obligations in this guidance.

1.3

As a result, RSLs should not assume that notifying us about various events necessarily means that the RSL has performance issues. In complying with this statutory guidance RSLs will meet the regulatory requirements in chapter 3 of the Regulatory Framework and their obligations under the 2010 Act.

1.4

Our approach to regulation is risk-based and proportionate. This means that we will only gather information that we need to regulate effectively. This also means that we need RSLs to tell us about certain events as quickly as possible. RSLs must comply with their wider statutory duties including those duties which are set out in the 2010 Act.

1.5

Standard 2.5 of the Standards of Governance and Financial Management requires RSLs to inform us about any significant events. This guidance sets out what type of events RSLs must tell us about so that RSLs can be clear about what we need to know.

What are notifiable events?

2.1

An RSL must tell us about any material, significant or exceptional issue, event, or change within its organisation and how it intends to deal with it, or where appropriate provide us with a reasonably detailed explanation as to why a significant change has been implemented.

2.2

The lists in Appendix 1 provide examples of the type of notifiable event an RSL must notify us about. The lists are illustrative rather than exhaustive. As a general guideline, notifiable events are those that may:

• • adversely affect the interests and safety of tenants, people who are homeless or other service users
  • threaten the stability, efficient running or viability of service delivery arrangements
  • put at risk the good governance and financial health of the organisation
  • bring, or risk bringing, the RSL into disrepute, or raise public or stakeholder concern about the RSL or the social housing sector.

2.3

What is ‘material’, ‘significant’ or ‘exceptional’ will depend on the nature of the event and the particular RSL. Whether an event is ‘material’ or ‘significant’ may depend on factors such as the size or complexity of the RSL; so each RSL should consider the risk and potential impact on the organisation when deciding whether an issue is a notifiable event.

2.4

We want to ensure that RSLs bring only the most critical issues to our attention. So, if you are unsure whether an event is a notifiable event, please contact your Regulation Manager who will be happy to discuss this with you and give further advice. If in doubt, we recommend that you notify us.

2.5

Appendix 1 sets out examples of the type of events RSLs must alert us to including:

• • governance and organisational issues
  • performance and service delivery issues
  • financial and funding issues
  • additional events that we require systemically important RSLs to notify us about.

2.6

RSLs which are group parents must notify us if they are exercising their constitutional powers to ‘step-in’ to deal with serious problems in a subsidiary RSL.

2.7

RSLs should consider the impact of the issue or event on their compliance with the Standards of Governance and Financial Management and other regulatory requirements, including compliance with their legal obligations and any requirement to notify their lenders in certain circumstances. They must notify us of any material changes to the assurances or supplementary information they reported in their Annual Assurance Statement. Please refer to our guidance in relation to the requirements for the Annual Assurance Statement.

2.8

Appendix 2 explains when RSLs must notify us about the outcome of tenant consultation, certain disposals, constitutional and organisational changes, and the timescales for notification.

Who should notify us?

3.1

An RSL’s senior officer should tell us about a notifiable event which relates to governance and organisational issues, performance and service delivery concerns or financial and funding issues.

3.2

The Chair of the governing body should tell us about a notifiable event if there is a conflict of interest for the senior officer, for instance if the senior officer has left the organisation or if there are concerns about the senior officer or the governing body. The Chair must also tell us about any changes relating to the Annual Assurance Statement.

3.3

Any staff member who is authorised by the RSL to do so can notify us in relation to the disposals and changes set out in Appendix 2. This is something that should be set out in each RSL’s scheme of delegation or equivalent.

3.4

The governing body of the RSL is accountable and responsible for the effective management of the organisation. Therefore the governing body should be aware of all notifiable events, even those which the senior officer is responsible for reporting to us. In some cases the RSL may need to notify other organisations of a notifiable event, for instance lenders, if it is a financial issue or where loan documentation specifies that certain events require to be notified to a lender.

3.5

Where the issue affects a subsidiary RSL of a Scottish RSL parent, the parent must notify us and tell us what it is doing to ensure that it is resolved. Our Group Structures guidance provides further information on requirements relating to group structures.

What information do we need and how is it submitted?

4.1

RSLs should submit a notifiable event to us through the Landlord Portal (‘the portal’). There are user instructions available for this here. The portal includes a template you should complete which sets out the type of information we need about each event. We need to know:

4.1.1  what the significant event, disposal or change is

4.1.2  when it happened or is likely to happen

4.1.3  who is involved and/or affected

4.1.4  whether there are equalities or human rights implications and how the RSL is ensuring it meets its legal duties in these areas

4.1.5  what the RSL is planning to do or what action it has already taken

4.1.6  when the governing body was informed/will be informed.

4.2

For notification of tenant consultation, please refer to our statutory guidance Tenant consultation and approval which explains our information requirements.

4.3

When notifying us about disposals, and constitutional or organisational changes, you should include details of the change and confirm you have complied with Regulatory Standard 7. Appendix 2 explains our information requirements in detail.   

4.4

When we receive the notifiable event through the portal we will aim to respond within eight working days.

4.5

You may be unsure whether an event should be reported under the notifiable events guidance if it relates to an issue already noted in your Engagement Plan. If so, you should contact your Regulation Manager for advice.

When should you notify us?

5.1

RSLs should alert us to a notifiable event as soon as is reasonably practical. Sometimes this will mean alerting us before an anticipated event happens so that we are aware in advance. There should be no delay, for instance, until after a scheduled governing body meeting. Where a major incident occurs, you should alert us as soon as possible. You should not wait until an event is completely concluded before you alert us to it. In particular when an RSL is considering a disposal or organisational change which requires it to consult tenants under the 2010 Act, the RSL should notify us at an early stage in its deliberations.

5.2

Where an RSL has told us in its Annual Assurance Statement that it is meeting the Standards of Governance and Financial Management and regulatory requirements and we find that it is not, and it has not notified us of this, we will engage with them to determine the significance of the non-compliance. It is a serious matter if an RSL has failed to tell us about a material or significant event or issue, or has delayed notifying us of it, and we will treat it as such.

5.3

We will engage directly with the RSL to determine any action we may need to take. Where the RSL’s regulatory status is shown as ‘compliant’, we may have to review this if the issue is sufficiently serious as to impact on the landlord’s compliance with regulatory requirements or the Regulatory Standards of Governance and Financial Management. We explain how we will respond to serious concerns about an RSL in sections 6 and 7 of our Regulatory Framework.

5.4

We may look at whether an RSL has notified us in accordance with this guidance as part of our work to verify its Annual Assurance Statement, or during a visit or other engagement activity.

5.5

We provide further information on timescales for notifications of disposals and constitutional changes in Appendix 2.

What will we do with the information you give us?

6.1

Our approach to regulation is risk-based and proportionate. This means that we will only gather information that we need to regulate effectively. We use the information submitted through notifiable events to inform our regulatory strategy and as part of the annual risk assessment process. Notifiable events allow us to monitor events that occur within RSLs. Often, it is simply enough that we know about the event and have assurance that the RSL is handling any associated risks appropriately. We may ask for further information if we need more assurance.

6.2

We may inform, or ask the RSL to inform, another regulator or authority if appropriate. We may also ask the RSL to get professional or impartial advice, for instance, legal, financial, or employment advice. Depending on the nature of the event, the RSL should consider whether there are any matters that it needs to report to the police. We will also report matters to the police if we suspect that an offence may have been committed.

6.3

Where we have all of the relevant information and are assured by the actions taken by the RSL, we will action and close the event more quickly. This will vary on a case by case basis depending on factors such as the size or complexity of the RSL or other ongoing regulatory engagement.

6.4

RSLs are responsible for managing their own organisation and for dealing with the events that occur. Requiring RSLs to tell us about certain events does not transfer that responsibility for dealing with the implications of the event to us. RSLs should have an effective strategy in place to deal with the event, and they should assure us that the action the RSL has taken, or intends to take, will protect the interests of its tenants and other service users.

6.5

If an RSL gives us information in confidence we will respect that confidentiality, provided it does not compromise our ability to safeguard the interests of the RSL’s tenants or the sector, or breach our legal obligations, for example, under the Data Protection Act and General Data Protection Regulation (‘GDPR’), or where we are concerned that an offence may have been committed.

RSLs’ internal policies and procedures

7.1

The RSL’s internal policies and procedures should reflect the requirement to alert SHR to notifiable events in accordance with this guidance. No matter how an RSL chooses to reflect notifiable events within its policies and procedures, senior staff and governing body members should understand the notifiable events requirement and assure themselves, and us, that they are complying with this through their Annual Assurance Statement.

7.2

If an RSL staff member, or governing body member is aware of a notifiable event which has not been submitted to us, they should report it within the organisation through the RSL’s whistleblowing policy. If that is not possible, or the attempt to report internally has been unsuccessful, they can whistleblow to us directly.

Links to other guidance

8.1

Tenant consultation and approval: We have produced separate statutory guidance on tenant consultation and approval for RSLs proposing to, for example, sell or transfer tenanted homes, which require it to consult tenants under the 2010 Act.

8.2

Whistleblowing: We have produced separate advisory guidance and a fact sheet about how RSLs should deal with whistleblowing. Whistleblowing is when someone within the RSL believes that there has been improper conduct in the organisation and reports it to someone within the RSL who is in a position to deal with it. If there has been whistleblowing within the RSL, the RSL should notify us about the allegations and tell us about how it is responding to them.

8.3

Section 72: We have issued statutory guidance on Section 72 of the 2010 Act. This places a duty on external auditors and reporting accountants to disclose events of material significance to us. If an RSL is aware that an auditor has reported an issue to us under Section 72, it does not need to report this issue as a notifiable event. This is because we will ask for any additional information from the RSL should we need it.  

8.4

Group Structures: We have produced separate statutory guidance on Group Structures for RSLs that are part of a group structure and RSLs which are considering joining or setting up a group structure.

8.5

Annual Assurance Statement: We have issued statutory guidance for RSLs on how to prepare their Annual Assurance Statement. This includes guidance on how to report any material and significant non-compliance with the Standards of Governance and Financial Management and regulatory requirements. 

Appendix 1 - Examples of notifiable events

Examples of the type of event RSLs must notify us of:

Governance and organisational issues:

• Any material change to the assurances and supplementary information contained in the RSL’s Annual Assurance Statement
• The membership calls a special general meeting
• Removal of any governing body member by the RSL
• Resignation of governing body members for non-personal reasons
• The membership of the governing body falls, or is going to fall, to seven or below
• Serious complaint, allegation, investigation, or disciplinary action about a governing body member
• A breach of the RSL’s code of conduct by governing body members
• Resignation or dismissal of the RSL’s senior officer
• Severance payment to and/or settlement agreement with a staff member
• Serious complaint, allegation, investigation, or disciplinary action about the senior officer (see Appendix 3)
• The senior officer is absent (or partially absent) for an extended period of time
• Receipt of intimation that a claim has been submitted to an employment tribunal
• Major change or restructuring within the current RSL or group
• Plans to set up a non-registered subsidiary
• Potentially serious breaches of statutory or common law duties by the RSL, including equalities and human rights duties, regardless of whether these have resulted in the submission of a claim or a legal challenge
• Any legal proceedings taken against the RSL which may have significant consequences for the RSL in the event of success
• Serious failure of governance within an RSL’s subsidiary
• Serious issue regarding a parent, subsidiary or connected organisation
• A dispute with another member of an alliance, consortium or non-constitutional partnership which may have significant consequences for the RSL
• Breaches of charitable obligations or no longer meeting the charity test
• Whistleblowing allegations.

Performance and service delivery issues:

• Any incident involving the Health & Safety Executive or a serious threat to tenant and resident safety; or where a regulatory or statutory authority (for example, the Fire Service etc), or insurance provider, has advised the RSL of concerns
• Serious accidental injury to, or the death of a tenant in their home or communal areas:
  • where there has been a service failure by the RSL; or
  • where there has been a failure, or perceived failure, in how the RSL has assessed and managed risk; or
  • which could potentially affect other tenants’ confidence in the RSL or the RSL’s reputation
• Major failure of key service delivery arrangements (for example, repairs cannot be carried out because a contractor goes into liquidation)
• Breaches of any ballot commitment to tenants or of any stock transfer contractual agreement
• Adverse reports by statutory agencies, regulators, inspectorates (or similar) about the RSL (for example a Care Inspectorate report with a ‘weak’ or ‘unsatisfactory’ grade or an upheld Care Inspectorate complaint)
• Any significant natural disaster (for example, fire, flood or building collapse) which affects the RSL’s normal business and puts tenants at risk
• Serious or significant adverse media reports or social media interaction, which could potentially affect tenants’ confidence in the RSL or that is damaging to the reputation of the RSL or sector.

Financial and funding issues:

• Fraud or the investigation of fraud either internally, by the Police or by an external agency or organisation
• Breach or potential breach of any banking covenants
• Serious financial loss; actual or potential
• Default or financial difficulties of major suppliers or service providers
• Any material reduction in stock or asset values; actual or potential
• Serious concern raised by lenders or auditors
• Serious and imminent potential cash flow issue
• Proposed assignation or transfer of the existing lender’s security to another lender
• Notification of the outcome of an adverse financial assessment of the RSL or its parent/subsidiaries/related companies/connected bodies from Pensions Trustees
• A serious or material reduction in the funding for care and support services for example for RSLs with significant care elements in their business, where a local authority withdraws funding
• Change of internal or external auditor.

Additional issues that we require systemically important RSLs to notify us about:

• Any change in senior staff
• Any material variation in the business plan or strategic direction of the organisation
• Any problems in relationships with key stakeholders for example local authorities or funders.

Please note: This list is illustrative not exhaustive. If you are unsure whether an event is a notifiable event, please contact your Regulation Manager who will be happy to discuss this with you and give further advice. If in doubt, we recommend that you notify us.  

Appendix 2 - Other notifications

The 2010 Act, as amended by the Housing (Amendment) Act 2018, requires RSLs to notify us of the outcome of tenant consultation, certain disposals, constitutional and organisational changes.

Tenant consultation

The 2010 Act requires RSLs to notify us of the results of tenant consultation, such as the outcome of a ballot or written agreement. Our statutory guidance Tenant consultation and approval sets out our requirements in relation to notification about tenant consultation. 

Disposal of land and assets

The 2010 Act requires RSLs to notify us of any disposal of land or other assets as soon as reasonably practicable after the disposal is made. Where a tenant who has a Scottish Secure Tenancy will become the tenant of another landlord as a result of the disposal, the RSL must notify us within 28 days.

The 2010 Act provides for us to determine when we want to be notified and when to dispense with this requirement. The following section is our determination.

RSLs must notify us of:

• disposals by way of sale of tenanted social housing dwellings (and ensure that they comply with their legal obligations to consult tenants under sections 115, 115A and 115B of the 2010 Act)
• disposals by way of granting security over social and non-social housing dwellings land or other assets
• disposals by way of sale or excambion of untenanted social and non-social housing dwellings, land or other (including non-residential) assets over ₤120,000
• disposals by way of lease of social housing dwelling;
• disposals by way of lease of roof space of residential, tenanted properties for renewable energy sources (for example solar panels) or telecommunications (for example aerials) and ensure that they comply with their legal obligations to consult tenants under s110 of the 2010 Act
• disposals by way of lease of residential property to an RSL, group subsidiary or any other body for Market or Mid- Market Rent or other non-social housing purposes (except where property is leased to a local authority for temporary accommodation for people who are homeless)
• any other disposals not listed above which could have significant implications for tenants or other service users.

RSLs do not need to notify us of disposals which do not fall into the categories above. If you are unsure whether notification applies, please contact your Regulation Manager for further advice. If in doubt, we recommend that you notify us. 

As part of its notification about disposals by way of sale or transfer the RSL should provide us with:

• a copy of the report to the governing body and minute of the meeting which agreed to the disposal
• details of the property which has been sold or transferred (property addresses)
• if the disposal was by way of a lease, a copy of the lease agreement, and
• the value of the property transferred and if the sale or transfer was at market value (if applicable).  

For disposals of heritable security the RSL should provide us with:

• a copy of the report(s) to the governing body and minute(s) of the meeting(s) where the disposal was agreed.

Constitutional and organisational changes

RSLs must notify us in relation to the following constitutional and organisational changes:

• change of name, office or constitution (s92)
• restructuring a society (s97) or company (s101)
• voluntary winding up or dissolution of a society (s98-99)
• converting a company into a registered society (s102)
• entering into a company voluntary arrangement (s103)
• voluntary winding up of a company (s104)
• becoming a subsidiary of another body (s104A).

For constitutional changes the RSL should provide us with:

• the date the constitution was or will be adopted
• a signed copy of the new constitution a copy of the report and minute of the governing body meeting which agreed to adopt the new constitution, and
• confirmation if the new constitution complies with the Scottish Federation of Housing Associations model rules.

For organisational changes the RSL should provide us with:

• a copy of the report and minute of the governing body meeting which agreed to the organisational change
• the date the change was or will be made, and
• for registered societies, a copy of the submission made to the Financial Conduct Authority including a copy of the special resolution passed by members (if applicable), or
• for companies, a copy of the submission made to the registrar of companies (including the

special resolution passed by members (if applicable).

Steps towards Insolvency

RSLs must notify us where a notice of a proposal of a resolution for the winding up of an RSL is given to members of the RSL entitled to vote on it (s73 of the 2010 Act).

An RSL will also be required to notify us under s73 of the 2010 Act if it takes certain other steps towards insolvency. Those steps are:

• presenting a petition for the winding up of a RSL
• applying for an administrative order in respect of a RSL which is a registered company
• appointing an administrator in respect of a RSL which is a registered company.

The timescales for notification are set out in the 2010 Act and summarised below. RSLs must ensure that they comply with these requirements. 

Notification process

1. RSL contacts us to discuss proposals.
2. RSL consults tenants.
3. RSL notifies us of the outcome of the consultation exercise.
4. If supported by tenants RSL then implements the proposal.
5. RSL notifies us.

Appendix 3 - Handling a serious complaint against the Director/Chief Executive of an RSL

Purpose

1.

This note sets out what a governing body should do when dealing with a serious complaint or grievance against the senior member of staff (Director/Chief Executive) of the RSL.

2.

We require an RSL to tell us when there is a serious complaint, investigation or disciplinary action relating to senior staff. These serious complaints do not arise often but because of their nature and sensitivity and potential impact on leadership arrangements, they have the potential to seriously damage the organisation. Our experience of these cases has shown us that if the governing body does not have a clear process to deal with matters like this then it can get into difficulties and the original issue can be made worse by the complaint being handled inappropriately. This note sets out what RSLs should to do to ensure they comply with regulatory standards in dealing with this type of situation.

Notify SHR

3.

RSLs should deal with and resolve minor issues at a local level, and we do not expect to be notified about those.

4.

The Chair of the RSL should notify us if there is a formal serious complaint against the Director/Chief Executive, for example serious allegations from an individual employee of bullying or harassment by the Director/Chief Executive. The Chair should also tell us how the governing body intends to handle the complaint.

5.

We recognise the highly sensitive nature of such serious complaints. If RSLs give us information in confidence we will respect that confidentiality, provided it does not compromise our ability to safeguard the overall interests of the RSL or the sector, or breach a legal obligation to disclose that information.

6.

Employment issues are for the governing body as an employer to resolve with the individual employee. But we do need to be assured that the governing body will handle a serious complaint or grievance about its Director/Chief Executive in a manner that is compliant with regulatory standards and will get appropriate advice and support to help it manage these situations and discharge its employment responsibilities fully and properly.

7.

RSLs should have effective governance systems that set out clear procedures for dealing with serious complaints or grievances about the Director/Chief Executive and the role of the governing body in those procedures. RSLs should be open and transparent about their decision-making processes for handling such matters.

8.

When dealing with a serious complaint or grievance about a Director/Chief Executive, the RSL should:

• tell us about it, in accordance our guidance on notifiable events; and
• take prompt, independent and professional advice as appropriate to the individual complaint or grievance.

Take prompt, independent and professional advice 

9.

We need to be assured by the governing body that it is seeking independent professional advice to support it to handle the complaint. In normal circumstances it is the Director/Chief Executive who provides advice to the governing body. But where it is the Director/Chief Executive who is the subject of the serious complaint or grievance, they have a clear conflict of interest and cannot be involved in any way in managing the complaint made against them. In cases like this the governing body should obtain appropriate advice and support to manage the complaint.

10.

The governing body needs to act quickly when a staff member raises a serious grievance about the Director/Chief Executive. For instance, if the grievance is about bullying or aggressive behaviour then the governing body must take immediate action. Given the likely sensitive nature of the grievance it should be handled carefully with independent, expert support and advice. The RSL may need to get an employment/personnel specialist to assist or a consultant with expertise in investigating such matters. The RSL must ensure that its investigation of the complaint, and any subsequent action, complies with its legal duties, including those in relation to equalities and human rights.

11.

Where a serious complaint has been made against the Director/Chief Executive by a governing body member or someone else who is not an employee, then the governing body should ensure that it is taking independent advice about how to handle the complaint and that the Director/Chief Executive takes no part in any investigation other than co-operating with the investigator.

Have clear procedures

12.  

An RSL should have clear procedures setting out how it will investigate serious complaints or grievances against the Director/Chief Executive. RSLs should apply good practice in dealing with the grievance and to meet our requirements as set out in this note.  

 The governing body’s role 

13.

Most RSLs have a standing sub-committee, such as a staffing sub-committee, with delegated authority to deal with human resources matters or consider serious staff complaints. In the case of a serious complaint against the Director/Chief Executive, the staffing sub-committee should be informed and involved, rather than the Chairperson dealing with the complaint alone. The staffing sub-committee is likely to be involved in hearing and deciding on the grievance. But in some cases, it may be more appropriate to commission an independent party to conduct the investigation and report back to the sub-committee. Where there is an investigation then the sub-committee must oversee the investigation and record all decisions to ensure transparency.

14.

Where the decision is taken to investigate a serious complaint, then the full governing body should be informed. However it should not be told any of the detail. This is to ensure:

• the full governing body retains control over the RSL’s affairs
• the details of the grievance remain confidential (the individuals at the centre of allegations have the right to confidentiality)
• the full governing body knows the grievance is being dealt with, for example, by the staffing sub-committee
• if the RSL needs to bring in outside help, then the full governing body is aware of the situation from the outset and can authorise any associated costs
• the governing body can monitor if a pattern of grievances emerges and decide what action to take
• by keeping the substance of the grievance confidential then there is a clean route for any appeal to be heard by other members of the governing body who are untainted by detailed knowledge about the issue.

15.

At the end of the process, the full governing body should be told about the outcome of the grievance.

SHR involvement

16.

If we have concerns about the action the governing body is proposing to take, or it appears that the Director/Chief Executive is involved in advising the governing body or in handling the grievance, then we may need to act to support the governing body to carry out its role in accordance with regulatory standards.