Narrative Regulatory Judgement
Provider: Swan Housing Association Limited
Regulatory code: L4145
Publication date: 10 December 2021
Governance grade: G3
Viability grade: V3
Reason for publication: Governance and viability downgrade
Regulatory route: Reactive Engagement
This regulatory judgement downgrades our previous published assessment of Swan Housing Association Limited’s (Swan) governance and financial viability from G2/V2 to G3/V3.
The regulator has concluded that Swan is non-compliant with the Governance and Financial Viability Standard. Specifically, the regulator lacks assurance that Swan has an appropriate, robust and prudent business planning, risk and control framework and that it has adequately managed, and where appropriate, addresses risks to ensure its long-term viability. In addition, we lack assurance that Swan has managed its affairs with an appropriate degree of skill to ensure effective control of the organisation.
There has been a material deterioration in Swan’s financial position since its last business plan was submitted to the regulator. This includes the identification of a significant adverse variance in its future development costs, largely due to the ineffective management of its development programme and its development subsidiary. The increased development costs coupled with delays to sales has increased pressure on Swan’s financial covenants. Swan’s ability to maintain covenant compliance is reliant on the continued co-operation and agreement of third parties. This reliance on third parties to resolve the situation represents a fundamental loss of control on the part of the board and executive.Information presented to the board and regulator has been inconsistent, and together with the failure to monitor covenant compliance effectively, has led to a loss of regulatory confidence in its accuracy and reliability. The regulator is therefore not assured of the robustness and quality of the data being used by Swan to inform its financial planning and reporting.The regulator’s assessment of Swan’s compliance with the financial viability elements of the Governance and Financial Viability Standard has been downgraded to a non-compliant V3. The regulator lacks assurance that Swan has the financial capacity to manage its exposures, is effectively monitoring its covenant compliance, and has been unable to gain evidence that Swan’s mitigation strategies will be effective in practice.Swan is engaging with the regulator to address the issues raised in this judgement and has commissioned external advisers to assist it in doing so. The regulator will work with Swan and its external advisers to address the weaknesses identified. Other providers included in the judgement None About the provider Origins Swan […]
