 Felly, hynny'n digwydd i gael i'w mwythgawr i 27 mwytyn i 2014 yn y Cymru Cymru. Mae'r prifysgol yn gwneud i ddweud i rydyn ni'n gweithio gwybod mwychol yn gyffredigol iawn i'u cystafell ar gyfer y brwydygach sylfa. Ond rwy'n gweithio i gael i gael i ddweud i'r gweithiau i gael i'w gweithiau i gael i'w gweithio i gael i'u ar gael iawn i gael ffiannig i gael i gael i'r ffan. Rwyf wedi gael i'r ffan o'r llwyddiad gyda Jim Eidy, sy'n irrhyw ychydig i fynd i mor unrhyw. Ar gyflifendu'r gael i gael i'r ffan, mor unrhyw ym mhwyaf i'r gael i'r ffaith er mwyn i chi i gael i'r ffaith i chi'r gael i'r ffaith i gael i'r ffaith i'r gael i'r ffaith i'r ffaith i'r gael i'r ffaith i'r ffaith i'r gael i'r yn ni'n ymwrdd yn rhanog及ig i gynnigを fel Llyfrinol Llyfrgell ac i chi'n gweithio'r cymdeinigol eich cwrwm hynny o'r gyfer dddefnydd y bydd y cymdeistai yn weltydol. Rwy'n gweithio yn gwylwch fel y cymdeithasol, yr unrhyw gweithio eich Cymdeithio i'r cymdeithasol yn cymdeithio i 3 a 4 yn cael pribwythau. Item 3 is to consider a list of candidates for the post of freight inquiry adviser and item 4 is to consider a draft report to the finance committee on the draft budget. Do members agree to take these items in private? Thank you very much. I move on to agenda item 2. We are here to hear evidence from a number of stakeholders on the Scottish Housing Regulator's annual report on the operation of the regulatory regime. Today I welcome Tony Cain, head of housing and customer service in Stirling Council, representing the Association of Local Authority chief housing officers and David Buchbinder, director of Glasgow and West of Scotland Forum of Housing Associations and Alan Stokes, policy manager of the Scottish Federation of Housing Associations. I think that we'll just launch straight into questions, gentlemen. If I can ask the first question, which is, in general, how well do you think the regulator is performing against its statutory objective to safeguard and promote the interests of current and future tenants, homeless people and other people who use services provided by social landlords? I'd say first of all that strong regulation, robust regulation, is critical to our sector as housing associations. The credibility that it gives us amongst tenants, amongst people who may become tenants of associations and amongst lenders and other funders is absolutely critical. The notion of a robust regulatory regime is never in question. Any criticisms that we may pass in the course of this morning are not in any way meant to undermine that notion that we must have and welcome strong regulation. We've highlighted in our submission to the committee a number of areas where we think which have gone well and have stood the regulator above some of its previous regimes. The content and accessibility, for instance, of some of its corporate communications on its website, the availability of information, the accessibility of the charter information that, obviously, this autumn has seen the first charter information from all housing associations and local authority landlords. That's available to anyone and, most importantly, tenants through a very accessible comparison tool that you can use on the regulator's website. Strengths are good consultation prior to that on how they would measure the charter. A very consultative approach from the regulator that I think was widely welcomed. We also welcome the notion that there's really good intention behind the regulator's efforts to try and avoid where it can going straight into using statutory formal inquiry powers where they perceive that there's a problem with an association. When you do go down that formal route you can trigger a lot of intervention, for instance, from lenders which could have immense financial implications for housing associations. There's good intent behind that wish to avoid that formal route. The trouble is we're then left with no ground rules in relation to what the more informal engagement is. That's a problem because nobody quite knows what to expect. We have had a lot of worrying feedback from Members over the course of the last couple of years. It's issues like regulators having meetings with associations that have no agenda, that aren't minited, people coming out of those meetings unsure of what was discussed, what was agreed, whistleblowing allegations, which, of course, the regulator has to look into, but which the association never knows what those allegations are because they've not been put in writing by the regulator and have an obsessive preoccupation with insisting or putting a lot of pressure on associations to appoint particular consultants that the regulator favours. In other words, where an association does have to appoint an independent consultant to look into whether there's a problem or a problem that's already been identified, we've heard from many members who come under intense pressure to appoint particular consultants recommended by the regulator and almost always English consultants and almost always costing well in excess of £1,000 a day of tenants money. The issues in terms of the manner of communication combined with the fact that there's no right of review or appeal mean that under the radar style of informal engagement leaves us all bereft of ground rules and it's not in the spirit of the Scottish Government's recent consultation on a code of practice for all Scottish regulators which promotes openness, transparency and, amongst other things, a right of appeal. We're having good discussions at the moment with the regulator, constructive discussions to address some of these issues, but the worrying thing is that some of the communication style that I'm talking about is on-going whilst we're having these discussions. Okay, we'll pick up some of these issues, particularly transparency, later on with our questions. Alan, you want to? First of all, I'd like to thank the committee for inviting the SFHA along here today to give evidence regarding the Scottish Housing Regulator. Unlike David, I think I'd like to start off by just saying how crucial regulation actually is for housing associations and co-operatives in Scotland. As such, it's important that the SHR and the sector have a constructive relationship. Regulation provides assurances to tenants, service users, lenders and other stakeholders that the highest standards are appropriately maintained. We actually conducted a survey of our membership as part of our evidence and we gained some positive feedback about the role the SHR is playing. However, we also received constructive criticism of the SHR with the intention of improving the effectiveness of the regulatory regime. We'd be happy to host a further Chatham House meeting between members of the ICI committee and our membership if the committee wishes to hear examples directly from the sector. I think that there is a reluctance for our members to stick their head above the parapet if they're going to be critical of the SHR, so it might be helpful if you're looking for more specific examples, if you'd be interested in doing that. Where as the SHR needs to be targeted where it's needed the most, it can't base its view of the sector only on the most negative examples. The vast majority of RSLs are well-run organisations, and as the SHR has such an important role in maintaining the reputation of the sector, it should also play a prominent role in promoting its excellent performance. Like David, we believe that the introduction of an independent appeal mechanism would be an excellent step forward in improving the transparency and accountability of the regulatory framework. Specifically on the question that you asked about the regulator's statutory objective, the feedback of our survey received 30 responses to which is approximately a quarter of our membership, and it was a broad base of different organisations right across the country. Also urban and rural, so it was probably quite representative of our membership. About two thirds felt that the regulator was meeting the statutory objective, but there was a caveat added to that that they felt perhaps there was a heavy-handed approach in the way that the regulator was going about it. There's a sense that maybe the regulator sometimes tires the sector with the same brush. Unfortunately, you are always going to get a few organisations here and there that perhaps are not going to perform the best, and that's where the regulator needs to be targeted. However, if it then views the whole sector in the same way, it's perhaps not being fair on the sector's performance as a whole. I think that that's pretty much what we had for that question anyway. I think that it's worth saying that we had invited 10-inch representative groups to today's meeting, but, unfortunately, none could accept invitation, but we've asked for written evidence from them as to how they see the regulator performing in terms of promotion of 10-inch rights, et cetera. Tony, do you want to... I think that our experience in the local authority sector of the regulator, it's a less obvious presence, and that's not meant to be a criticism of any talk, but it's range of engagement with us. It's narrow, and as a consequence, range of concerns around what it's likely to be doing is slightly narrow than colleagues in the housing associations sector where the regulator has a more comprehensive remit. Over the piece, I would have scored seven out of 10. I think the regulator is, just to make things further direct and simple, has gone through a period of quite considerable change, has seen some substantial reduction in its resources over the last couple of years, and that has resulted in required a big adjustment in the way it does its business. I would agree that there are some issues in the way in which the regulator can communicate. Some of the discipline and precision in that communication has been lost with the reduction in resources, and I think some of the disciplines around engagements, recording, reporting and publishing, and particularly the timescales around those publishing reports have become a little less critical to the organisation. It was asked earlier on if I should declare an interest. I worked for one of the regulator's predecessors for four years, an inspection manager, and we were very clear that our engagement with the sector was very precise in terms of its timing, and when we say we do things we will do them, so we will issue reports, we will issue documents, we will arrive and do our work at particular times in a disciplined and structured way. Some of that has gone, and a couple of best examples would be one that we've seen only one, I think, published report in the local authority sector from own authority in Stirling. There were six or seven months between the on-site activity and the publication, by which time, when we report to members, we have all the actions. Members are retrospectively approving a completed action plan rather than getting a chance to scrutinise the actual report itself, so that delay was problematic for us. The other example would be the length of time it took to get the housing options thematic published. It had a really important report, an excellent piece of work. I think that it was added substantially to the debate about where we are going with housing options and services to homeless people in general. However, it took some time to get it published, and I think that that weakened some of the conversations and some of the investigation, some of the engagement around that. On the whole, as I say, seven out of ten, the regulator is working hard. It's adjusted its position over the last couple of years. I think that the work around the charter has been particularly important, and I expect now having the first charter reports and the comparative reports, that we will see a little bit more targeted engagement around the local authority sector, based on that information. Perhaps, if I can ask you to focus on tenants, homeless people, service users here, and ask the question in a different way, can you identify any future risks to tenants, homeless people and other service users from the way that the regulator currently performs its functions? In the local authority sector in particular, because the regulator is unnecessarily engaging with a range of other inspection and regulation organisations, the quality of that engagement will be critical to its ability to develop a position and defend the interests of tenants and other service users. There remain some issues around the delivery of homelessness services, particularly in relation to engagement with mental health services and social care services, where there are gaps in the provision and there are service users who suffer as a consequence. It has been quite difficult for the regulator to get underneath that gap and to start teasing that conversation out, because it would require it to do that in conjunction with the Care Commission and the Social Work Regulator as well. I think that that has proved more difficult. I suspect that, as providers, local authorities have been a little bit slower, perhaps, than we ought to have been, to examine some of the harder-edged issues that impact on the most vulnerable of service users in the homelessness system. It is a question of balance. Clearly, it would not be in tenants' interests if a housing association was in serious trouble, financial trouble or very serious governance issues. In that sense, you understand the regulator when it says that we are protecting tenants' interests by trying to do what we can to make sure that this housing association is or becomes in better health. There is a balance there, because there have been cases where, in our member's view, the treatment of the association has not been proportionate. You then run the risk that the association could end up spending thousands of pounds, potentially hundreds of thousands of pounds, looking into an issue, appointing consultants, et cetera, which has a real direct cost for tenants. It is only tenants that are paying for that. That means that it is really important for the regulator to get it right in terms of being proportionate, otherwise there is a danger of actually acting against tenants' interests. However, it is a balance, and I think that sometimes that has not been achieved. I will follow that up in a minute, David. I think that I would back up exactly what David said. There is a risk if the regulator is getting bogged down on not trivial matters but less strategic matters, so that it could miss something more important than elsewhere, which certainly would not be in the interests of tenants at all. Of course, the main thing is that any cost of regulation is paid for by tenants ultimately, because that is where the rent money would go. My understanding is, both from your written evidence and others, that the housing regulator was particularly concerned with governance in this first period. Perhaps an overemphasis in Governments, according to some of your evidence here. That is something that we can follow up with the regulator when it comes through. I note, though, that in their annual report, what they call their emerging issues and our priorities for 2014-15, the first bullet point that they have done is that we think that it is important that social landlords keep rents affordable for tenants. We are asking those with business plans based on above-inflation rent rises to consider whether that is sustainable, given the financial challenges tenants face. We know all about the welfare reform issues that people are facing as well. It would seem to me that this is a particularly relevant priority for a regulator to focus on. I do not think that, although it came out of the blue initially in March this year, when the regulator first made statements about the need for associations and local authorities to be confident that the rent increases were basically in place in a number of housing associations—I will not let Tony speak for local authorities—based on a formula that was about above-inflation increases in some cases up to 30 years. In raising that issue, I think that we felt that there is perfectly reasonable for the regulator to ask that equally as it is right that associations look at themselves and say, are we happy that that is sustainable for our tenants and those who will become our tenants in the longer term? I would say that I think that there is a risk that in raising the issue the regulator has sort of chapped the door and run away in the sense that this is a big complex issue and that it has been raised, but where that is now going, you might expect the regulator to be saying a little bit more about what is an affordable rent, what criteria should an association look at. We are quite accepting of the regulators raising the issue, but there is a sense that it has thrown something into the fire and stood aside, but it is quite legitimate for it to raise the issue. To some extent, that is a very fair comment. It was Michael Cameron, the chief executive, who at the CH conference this year introduced into his presentation a very simple proposition that housing associations should be moving away from inflation plus formula and should be focusing on developing rent proposals based on costs and service proposals. An important point, it was not the worst place to make it, but it was perfectly legitimate to make it in that forum. Interestingly enough, from my point of view, it reflected exactly the conversation that we had in Stirling and the approach that we have now taken to rent sort had agreed prior to that, prior to March. The issue is that, yes, having thrown that in, having raised it, there has been very little follow-up, there has been no further conversation about it. We have not seen any guidance on that, we have not seen any engagement across the sector more generally on that. I think that that is a very fair point. In the local authority sector, it plays differently because our rent setting process is slightly different than our financial arrangements, and the oversight of our financial arrangements are rather different. However, in that context, there is probably some benefit for the regulator to get a better handle on financial planning in local authorities, the extent to which the business planning disciplines that were pioneered in the housing association sector are now being used, and they are not universally used in the local authority sector, and they probably should be. However, in that context, the Scottish Government's recently published guidance on transparency in the management and housing revenue accounts is a fairly critical piece of guidance, and I think that the regulator ought to be in a position to understand what it means and how it plays through in financial decision making in local authorities, even if that is not an area where they have any particular regulatory involvement. They certainly have a concern about transparency in reporting to tenants, so the guidance requires local authorities to report to tenants on how the money is being used, and the regulator certainly has an interest in overseeing the extent to which we are complying with that requirement. I do not know that they currently have enough detail around those processes to do that function fully effectively. I challenge the regulator on that chat-door-run approach when it comes in. Kylie Feabody should arise. I would not say that, and I am inappropriate in the moment, too. It was very apposite, very timely. I think that it is entirely appropriate for an area for the regulator to be focusing on, and I think that it is in line with her statutory objective. I think that what is important is that a balance is found between what is affordable for tenants and still maintaining the financial viability of the organisation. I suppose that that is what happens next in terms of the regular issues and the guidance and how it engages with the sector from there. If I can explore the notion of proportionality that all of you have mentioned, I think that it was yourself that indicated that some of the issues that we are focusing on were trivial. Can you provide examples of that? Is there any views on how a more proportionate approach could be achieved? As I said earlier on, there is a challenge in providing specifics in terms of examples, because people are understandably reluctant to be critical or make out that there is a problem with the regulator in terms of maybe being having their card marked or something along those lines. That is just a perception, I do not think that that is fair, but it does show that there is an issue that exists in terms of the relationship between the sector and how the regulator is perceived. In our survey, there were 57 per cent of respondents that did not think that the regulator was performing its function in a proportionate manner. In terms of a more general example that David gave earlier on, we have often found that the regulator will engage with a management committee but refuse to allow the staff to be present and refuse for any minute to be taken of the meeting, which then leaves it, whether there is no transparency there in terms of what was actually said and it is not exactly promoting good governance. David, do you want to comment? Yes, a couple of comments. One broader about the regulator often makes quite a lot of having saved or rescued some associations from insolvency and perhaps that has then led to the association joining the group structure of another association. I think the forum would feel comfortable to be reassured by the regulator that it has learned from some of the more difficult cases of the last few years when there is a sense within the sector that perhaps the regulator did not spot things as soon as it might have done and although it may have been in the end, I think that that sense of proportionality of maybe sometimes dealing with trivia but missing something much bigger going on somewhere, we would feel comforted to know that they have maybe learnt some lessons. How could we have seen that earlier, a sort of approach where there have been difficulties? But Alan, I agree with Alan that some of that sense of a lack of proportionality is not so much about what is being looked into. It is quite reasonable to suppose that when the regulator is engaged with an association there may be an issue that needs looking into it, may or may not become a series, but it is the manner of the communication. In a sense, there is an irony because the style and accessibility of the regulator's corporate information, the stuff that it produces in newsletters and on its website, is really generally regarded as very high quality, but the manner of its communication style when it is engaging with a particular association does seem disproportionate in a lot of cases. Whistleblowing is an example and we may or may not come to that later, but there is a sense that associations sometimes feel that they are guilty to proven innocent. It is about manner, it is about approach, style, language and it just sometimes to our members seems disproportionate as an approach when all that is happening at that particular stage is that an inquiry is being made, something is being looked into and maybe there is a feeling amongst members that there is an assumption of something is wrong and that sense of guilty to proven innocent is something that a number of our members feel. Local authorities, Tony, is that a similar perspective? No, not at all. I have no sense of a feeling of disproportionate engagement from the regulator across local authorities at all. The annual report says that they visit 15 or engage with 15 of the 32 local authorities during the year. That is very nearly half the sector. There is nothing coming back from my colleagues that say that they feel that they are being pestered or that they feel that it is inappropriate or that it is unbalanced. With the local authorities, it is very clearly within the regulatory framework that is agreed through the local arrangements. It is always proportionate. We always know that they are coming. They were twice in Stirling last year. We were well warned in advance. We were perfectly clear what they were coming to do. They did what they were coming to do. There were some issues in their communication during the on-site and post-on-site periods, but in terms of the proportionality of what they were looking at, I have no feel for those types of concerns. To be fair, the regulator engages with us in a much narrower range of issues, however. We could maybe explore some of the issues of transparency. Mary, would you like to ask me? I want you to explore in a bit more detail the issue of transparency, because the 2010 act requires a regulator to carry out its functions in a transparent manner. There have been some criticism of the way that the regulator carries out those functions, specifically from your organisation, David, who said that the regulator lacks transparency, frequently acts under the radar, leaving housing associations uncertain what to expect, how they should behave, that the lack of a review mechanism where an issue is disputed is also an issue. Perhaps if I started with you, David, if you could explain in a bit more detail your specific concerns about transparency, and then I will move on to the other witnesses. I think that when the 2010 act was introduced, as you would expect of any legislation, it focused on formal statutory mechanisms for dealing with an issue, both initially looking into it and then taking intervention action, if that was deemed to be necessary. In the hindsight, when we look back at what has developed or what has evolved with the regulators, with, as I said earlier, a good intention, an effort to use statutory formal mechanisms as a last resort, because it does trigger all kinds of interventions from, for instance, lenders, which could sound the death knell for some associations if all their loans and covenants were renegotiated, repriced in the current climate. There is genuine good intent there, I think, on the regulator's part. We then have a lack of guidelines or rules of engagement about what are the alternative ways in which, if the regulator doesn't go down those formal routes of how it does act, how it engages with the sausage. The regulators accept, recognised in recent meetings we've had with them, that there is a huge appetite in the sector for some more ground rules, for some more guidance. We're certainly making progress there. Obviously, the lack of a review appeals mechanism is something that we all agree has to be put right. It is strange looking back to think that all of us, we allowed an act to be passed without that formal mechanism. We're probably all looking back and wondering how we managed that. I then go down to a micro level about transparency. That's what I've been talking about, is transparency about how will the system work. Then, when you go down to an individual engagement level that there are certainly worrying aspects that we would want to put right, there does seem to be a sort of almost a kind of motto or mantra that's about nothing in writing. That does seem to be an approach from the regulator in some of its engagement with individual associations about not putting enough in writing. I realise that we may often be dealing with sensitive issues about associations, maybe about particular staff, committee members, financial issues, whatever. Of course, there will be delicate issues. Nonetheless, for the committee of an association to be drawn into a meeting with the regulator, which isn't going to be noted or minited in any way, it's really problematic. We don't think that's in anyone's interest to not be sure. Again, if somebody makes a whistleblowing allegation, which is a perfectly reasonable part of the system that we work in nowadays and you'd expect people to be able to make whistleblowing allegations and for them to be looked into, it's surely appropriate for the association to know, even in some paraphrased way, because obviously the regulator doesn't can't give away the identity of somebody making those allegations, but just to summarise, these are the allegations. We've heard from a number of associations that haven't had the benefit of that. What then happens is, as you go through the process, as something's looked into, you're never quite sure what were the original allegations, what's come along since, and that's simply a lack of transparency that would be helped by just a summary of what the allegations were. It's helpful, thank you. I think that one of the key things that came out of the survey that we did was that there is a real appetite for an independent appeal mechanism, with two thirds of respondents that felt that way. They did urge caution though, because while it's crucial, and it needs to be based on a clear rationale, it can't add extra bureaucracy and it can't add an extra cost. It needs to be very efficient. I think that one of the best examples that's currently existing within a regulator is the office of the Scottish Charity Regulator. They currently have an independent appeal mechanism that I think perhaps it could be adapted to fit with the SHR. I agree that some kind of appeals or review process around regulated decision making is entirely appropriate. I agree that it seems odd that the system was set up without it. I don't imagine that it requires legislation for the regulated or operator review process, but I agree that it's a gap. I also agree that there is a risk with review mechanisms that they become bureaucratic and bogged down and expensive. I think that there's something for the sector there to take responsibility for on the issues that they choose to contest and the way they choose to contest them. In my previous life, I did see landlords turning up with expensive lawyers to contest minor aspects of reports on operational issues, and that's not a proportionate response from the sector. However, the co-principal is, should there be a review mechanism? Absolutely, I think that there should be. I move on to talk a bit more about communication. The Scottish Housing Regulator's communications research has found that stakeholders valued the informal dialogue that they had. It follows on from the point that you were making about attending meetings and there's no note of that meeting. Tenants, groups and stakeholders have emphasised the need to undertake more meaningful engagement in communication with tenants. However, there is a balance between keeping things on and informal footing and moving things on to a more regulated way of doing things. Is there a conflict between improving transparency while keeping the benefits of informal dialogue or does everything need to be put on a more regulated footing? I think that it's an achievable outcome to get some ground rules in place that would enhance the current regulatory framework document that gives us all more sense of how some of the non-statutory, because obviously everything they do is within their statutory powers, but some of the less formal mechanisms of how engagement that does go down that less formal route will work without necessarily thinking that the answer is, well, let's just do away with the informal and everything we do will be done in a more sort of through formal inquiry routes. I think that it is an achievable outcome to add a layer of guidance so that we know what to expect. I would make one distinction. My reading of the stakeholder research about its communications was that that focused more on how the regulator communicates more generally through its annual information, its annual reports, of how it communicates with the sector overall rather than what happens at an individual level when it's looking into something. I can understand that there was a sense of good feedback about its corporate communications, as I've mentioned earlier, that generally had a very consultative approach to doing things. My reading of the stakeholder communications report was that it focused more on that side of things rather than on what happens when the regulator goes in, as it were. I suppose even when the regulator does go in that there is a balance between keeping it informal and making it more official, if you like, but there will be different organisations, different individuals that value a different approach. It would be quite a challenge to get a one-size-fits-all for everyone, because some organisations may value a more informal approach, some organisations may want something a bit more formal. What are the more obvious outcomes to aim for in that? Whenever an individual association's preference about the style of communication, it would think that any organisation that is on the receiving end of whistleblowing allegations could at least know what those allegations are in summary. I think that there are some easy wins for us all to aim for that wouldn't upset that apple cart in any disproportionate way. Would you be more specific if you could improve transparency? It will improve transparency to have some rules of engagement. Yes, absolutely. I agree. I think that some form of guidance on engagement in terms of the ground rules and what we will do, whether they are going to informally approach it or whether they are going to be specific in terms of how we are going to engage. I think that that would be important and that would add transparency. Tony? I think that the issue here is being clear about what is being recorded by way of information and assessment as a consequence of any particular engagement. It can be managed by consent between the organisations or if its statutory intervention can be imposed by the regulator. However, at the end of it, however it is done, I think that landlords need to be clear what the regulator has taken out of that engagement and what they have recorded and what they will be using as a basis for future assessments. We had a regulatory visit earlier on this year and we were not advised of any of the conclusions that were drawn or the outcome from that. We have got nothing back in writing. I am now unaware of what the regulator is taking into their conversations with other regulators. At the very least, that one last detail needs to be there, so we are clear. If it is an informal conversation, if it is a low-key intervention and if it does not amount to a formal inspection, nevertheless, what has the regulator learned by that? What is it recorded in its own files? What will it be taken for in its broader assessment of the organisation? I think that we need to be clear about that at the very least. With guidance and a change in the code of practice, would that be enough to bring about the change that we think would be beneficial, or would it need legislative change? I am fully equipped, but this is in parties about style and culture, and I suspect that that can be done without statutory order. You are even changing the guidance. The regulator says that there are codes of practice in place. It says that chapters 6 and 7 of its 2012 regulatory framework are the codes of practice on inquiries and on intervention, respectively, although you would not know that from reading those documents. I think that there is a chance, without amending primary legislation, that there is a chance to amend that guidance now to cover some of the more informal mechanisms of engagement that happen and to make it much clearer than is the case at the moment that the chapters of the regulatory framework are, indeed, the statutory codes of practice. As part of the regulatory reform act, it is developing a code of practice for regulators in Scotland, so it could feed into that. As part of that, it is looking at an independent appeals mechanism being statutory for all regulators in Scotland, so that could be a way of doing that. I was going to cover the issue of communications, and I seem to have spoken a little else. However, there are a couple of points that would be interesting to develop. First of all, the regulator's communications research highlighted that both tenant groups and strategic stakeholders felt that there was a need for the Scottish housing regulator to undertake more meaningful engagement and communication with tenants and provide simple, concise information to tenants on its role and on the charter. What do you think they need to do specifically to improve their communication with tenants? Certainly, they have set up a national tenants panel of tenants and service users, which I think is a good start. One issue that might be around that is that there tends to be specific tenants that the regulator always engages with, so perhaps maybe finding out indeed. That is more down to tenants that are more willing to engage than others, so I think that that is just the way of it. If there is a way of finding out that they are engaging with the harder-to-reach groups of the groups that are engaged with it, I do not think that there is a great awareness of the Scottish housing regulator amongst tenants in Scotland. I do not think that many of your joe blogs would know who the Scottish housing regulator were. There is the opportunity for tenants to report significant performance failures directly through the regulator. I think that some of the guidance on that was a little perplexing for tenants to understand exactly what that meant, what is a significant performance failure. That needed to be explained in more in terms that the tenants could understand. I think that that is the idea that they need to look at in terms of engaging with tenants, actually reaching groups out with just the normal people that they contact. I think that the last few months have seen a real step forward for tenants in the sense of the publication of charter information, both for individual tenants about their own landlord, but of course then about the cross-sector information. We are on a journey now to that leading to tenants being more aware that this is what the regulator does. It looks at how their landlord performs and some of that will be a lot more visible and meaningful to tenants than what happens with governance issues or financial issues. I am not saying that those are not important, but they are less visible and less obvious to tenants' everyday lives. I think that in terms of the broader engagement with the whole body of tenants, there is probably greater awareness now than even three or four months ago before the charter information came out. In that sense, it is a step forward. It should raise the profile of the regulator amongst tenants in general. I would not be nervous about speaking on behalf of tenants as a body representing landlords. I know that you have obviously tried to get tenant interests involved in this look at the annual report. I hesitate to offer an answer on behalf of tenants. It is certainly an experience that I have had out in the field talking to tenants in a fairly formal setting that there are a few individuals with very strong opinions. The question that I am left with in my mind is whether they represent tenants as a whole or if they simply represent their own opinion. I think that we have a lot to learn on both sides about how we consult at that level. A slightly different subject was mentioned a few moments ago that there is a draft regulator's code of practice. It says that regulators must communicate effectively with those who regulate to build up relationships and mutual understanding, which helps to avoid and mitigate or mitigate disputes. To what extent do you think the Office of the Housing Regulator currently operates with that principle in mind and what changes do you think would need to be made in order to make that requirement fit? I give what I honestly think is a balanced answer. It is positive and less positive. The regulators sought, for instance, to publish a series of governance matters publications in which it looks at, obviously anonymously, specific cases where it has intervened and identified issues that have had to be addressed, and it is trying to look at what the lessons, the wider lessons of those are. That is a very direct constructive way of getting stuff out there, of enabling everyone to look at that and see what lessons can be learned. Some of those governance matters publications have perhaps erd slightly on the side of the learning points that come from it, which many of them are very useful, but sometimes there has been a sense of addressing committee members and saying, are you sure that you are not being shafted by the senior officer? Committees and chairs need to have that right governance relationship with senior staff, but there has sometimes been an undercurrent that portrays the whole sector as being one in which senior staff are trying to keep things from their committee. Again, I think that sometimes the tone has not been achieved right, but the sense of promoting some sharing of information, sharing of practice has been good, certainly, within publications like governance matters. I do think that there has been an improvement. Initially, when the regulator became independent of government in April 2022, there was a sense, perhaps, of trying to flex its muscles, trying to show that it was who it was, but I think that there is more positive communication coming from the regulator now. I think that they might recognise themselves that there needs to be a shift. For instance, section 2 of their annual report is that RSLs are well-governed and in good financial health, so they are at least making an effort to now promote the fact that the sector is, on the whole, well-managed. I think that the best example of maybe a negative communication that has come from the regulator is the Governance March publications that David Rennan referenced there. Perhaps, if there was more of a focus on good practice in the sector as well to balance it out, that would help the tone. It is just an observation and I will make it and give you the opportunity to comment on it. If you wish. I get the impression that the broad issue that exists here is probably an issue of trust, but that, if I read anything from your comments, the situation is improving rather than deteriorating over time, would that be fair? What our members report is a mixed picture. There are examples that suggest some awareness amongst some regulatory staff of the concerns that have been expressed within the sector. In terms of our meetings with the regulator, there has definitely been a recognition that, as I said, there is an appetite for more information about what the rules of engagement should be. Nonetheless, what is a bit more worrying is that some of the, we are still getting, including right up until the last few days, we are still getting examples of direct engagement at a housing association level with the regulator, which gives us cause for concern. We would be much more reassured if we were getting less of this type of feedback of the type, for instance, as I referred to earlier about associations coming under intense pressure that, when they appoint, and it is the association that appoints in almost all cases an independent investigator where this is deemed necessary, but coming under intense pressure to choose the one that the regulator wants it to choose, we have had instances of that right up until very recently. It would be nice to come back in six months' time and feel that we are hearing less of those kind of pressure tactics, if you like. I am not yet in a position to say that it is an improving situation. I think that I would echo what David is saying there. Given the survey that we conducted, it was still 57 per cent that did not feel the regulator was performing in a proportionate manner, so that would need to be a lot lower before we could really say that things were moving completely in the right direction. I think that there is, as I said earlier, a reluctance for people to raise their head above the power, but you said about mistrust, and I think that that is definitely there. Even in our survey, a third of respondents wanted to remain anonymous even to respond to us in talking about the regulator, which I think shows that sort of culture that is developed, which is why, again, to reiterate, I think that it might be helpful if the committee were so minded to, we would offer a Chamhouse meeting to hear specific examples from the sector in a more sort of safe environment, if you like. If I may, one or two comments on a range of issues that arise there. First, on the issue of the extent to which the regulator is communicating directly with tenants and tenants are aware of the existence of the regulator, I think that there is a simple issue of proportionality and cost involved in that. There are half a million tenants in Scotland, half of them at least don't have access to the internet on a regular basis, certainly not in fixed internet in their own home. Using traditional ways, which in other sectors work very well with the service users, is not going to work as well. I think that landlords need to take some responsibility and need to have that conversation with the regulator about how we make the regulator more visible, and we probably need to have a bit more structured approach to that. However, I think that we have to accept some responsibility for if there is a lack of visibility, then we have to accept some responsibility for that. On the issue of building relationships, funnily enough, one of the things that he is most likely to build a relationship with is informal contact. Issues have already been raised about informal contact, but it is the ability to pick up the phone and talk to somebody is the action that will leave you in a position where you feel you can begin to trust them, and to the extent that that is not necessarily the easiest thing to do in the world, then I think that a change in that approach or that that area might make a difference. As far as the local authority sector is concerned, I do not think that the extent to which the regulator is trusted has improved significantly in the last couple of years. I think that our experience around the housing options thematic was a very, very positive one. The outcome of that, I thought, was excellent. I think that notwithstanding some of the delays, the overall engagement was very positive, and I think that it left a much better feeling across the sector when they saw that report and they had those conversations than perhaps had been previously case, and that has helped significantly. I also think that the issue of trust is one that sits on both sides. Regulation and inspection in particular is essentially underpinned all the time by conflict. The regulator is there to do something in particular, not necessarily to the benefit of the regulated organisation, and we have to accept and acknowledge the nature of that relationship as we start to understand the extent to which we trust and the way in which we respond to the regulator. I do not have a problem with the regulator the way it does its business. I do not have a problem with the personnel in that organisation or the way in which they engage with me or the local authority sector. They have a particular job to do. It is not always going to be something that we want to hear. Sometimes we just need to deal with that, but in the end, there is always going to be that risk, and there will always be that element of conflict that underlies the relationship. We need to acknowledge and accept it. I would like to add one more thing about that issue of trust. It is very telling that a number of members have said to the forum that, in the past, if they were dealing with an issue, it could have been financial, it could have been about a development issue, a piece of land, something that they wanted to do. In the past, they might have picked up the phone to the regulator and passed it by them and had a discussion about dealing with the issue. A number of members have said to us now that they would think twice now about doing that. I think that that says something about a changing relationship there that perhaps was once seen as more supportive than perhaps it is now. That is fair to say that we have had a lot of contact from members that have said exactly the same thing that David has just outlined. I was going to ask you about governance matters publications specifically, but we have touched upon that already. The one thing that I would like to ask specifically David at this stage is that you have commented a couple of times about the tone of communications. How would you see the guidance and tone changing so that it does not create the perception that, as you have said in your written evidence, that the senior officers should not be trusted or that they are not sharing sufficient information with committees and so on? How would you see that changing? I think that one of the ways that Alan just mentioned is that if the governance matters publications over time can perhaps include a greater focus on good practice. Now, the regulator may say that we do not go in where there is good practice in a sense that is not our concern. Perhaps you could argue that some good practice is implicit in lessons to be learned from poorer practice, but again it is just about a greater recognition such as is in their annual report but did not feel it came out of the governance matters publications that fundamentally the sector is a healthy sector. You would not get that feeling necessarily from reading the tone and language of some of the governance matters publications, but I think that the sense of so many brownie points could be scored by just getting more down as to what we can expect, what are some of the rules of engagement that can never cover every situation. We do not expect guidance to do that, but I think that that will help those associations when they are in engagement feel less threatened, less defensive, less uncertain about what to expect. In a sense, there is such a major gain or a big win there in terms of overall communications and trust if we can all understand better what to expect when engagement comes. How widespread is the concern about the tone? If my understanding is correct, the housing regulator held a number of governance matters events which had in the region of about 113 associations that went along. 81 per cent took part in the feedback exercise and it was overwhelmingly positive about the best practice, training and support, et cetera. How widespread is the concern that you are raising? I think there is a distinction here that the excellent feedback that we also had from committee members that attended those sessions was about how good those training sessions were and what it helped them to understand as committee members of housing associations. That is different from feedback about individual engagement where there is an issue. That feedback was about the quality of the training that was received and it went down very well, but that is quite different from what is happening on an individual engagement level. Do any of the other panel members have any concerns about the guidance matters publications? As I said earlier, there is definitely a place for learning from others' mistakes. That is what the focus of the governance matters publications has been. However, because there are consistently negative examples, it just gives a perception of the sector that perhaps we will be looking to avoid. So maybe a bit more of a focus on best practice examples, which people could also learn from and borrow from what people are doing well, I think would be very helpful in changing that tone. I can offer an external observation, if you like, since the local authority sector is not necessarily involved in the conversations around governance that go on between the regulator and the RSLs. In the local authority sector, we feel the presence of our elected members on a daily basis. The scrutiny that they offer and the challenge that they bring is a critical part of everything that we do. At senior officers, you think about it regularly through the day. It is part of what you do. My impression, which is strengthened by conversations with senior officers in the housing association movement, is that Governors on housing association boards do not play a similar function. They are not present as a challenge to decisions and behaviours and outcomes in the way that local authority elected members are. To the extent that the regulator has to either get more members to a place where they can be that presence or be that presence itself, it seems to me that it is doing a very useful job. Can we wrap up the questions with a series of issues that we have not touched on as yet? If we can just touch on appeals, you have all stated that you think that an appeals mechanism should be brought in. Just briefly, you are able to say how the lack of an appeals mechanism has impacted on social landlords and tenants. It just goes against natural justice. When landlords make decisions in relation to tenants or applicants or homeless people, they expect those decisions from time to time to be challenged through a range of mechanisms up to and including the courts, it just leaves associations in an incredibly exasperated position when they feel that there are their level of engagement, the formal level engagement, if it has changed from low to medium or medium to high. These things have big implications for associations and their finances, their relationships with lenders. If you cannot seek a review, if you cannot ultimately appeal that, it is an incredibly dispiriting and the opposite of empowerment. It is a very vulnerable position to be in if an association strongly believes that in effect there has been a miscarriage of justice. It just goes against all principles of natural justice that there is no appeal system there. David, your organisation in particular has been critical about the regulator's requirement to consider the future of an RASL when a senior member of staff has moved or retired. Are you able to give more detail about why you have those concerns? Yes, our concern is with that sense of across the board. This is a rule that has applied in the vast majority of cases where the retirel or departure of a senior officer according to the guidance on notifiable events A, you have to carry out an options appraisal and B, and explicitly in the guidance at the moment that is the reference to that options appraisal, including being expected to include looking at the options for marrying up with another association in some kind of structural relationship. That reference to having to do that or being expected to do that within options appraisal is especially threatening to smaller community-based associations that prize their independence. We have been encouraged in the last few weeks by indications from the regulator that they see fit to review that reference, to review the guidance overall such that, as we have argued for a long time, if an association is in good health and can prove that, good business plan, good finances in place, the mere act of the senior officer leaving should not trigger anything if it is a well-run association. We would completely accept that if there are real problems within association and the senior officer leaves, that needs to trigger something more in depth. However, where things are running fine and that can be proven to the regulator's satisfaction, there should not be any need for an options appraisal and no, indeed, the potential for structural partnerships. We reassured that the regulator is minded to review that guidance and change that shortly. Aside from that reference to the structural review and potentially threatening smaller housing association, do you see any positive benefits from that guidance for an option appraisal process for any turnover in senior staff? I think that when a senior staff member leaves any association, you would expect it to be looking at what is the staff complement. Is there any change in terms of staff roles that would be needed? What would be the job description of an incoming director? You would expect any organisation when senior staff leave not just at the top tier, but a number of tiers, particularly towards the senior and to be doing good housekeeping like that, but it does not need to threaten in any way or refer to the independence of the organisation. Finally, if I can just wrap up the discussion, there have been a number of concerns that all three of you have mentioned about the regulator just to ask what level of discussion there has been about those concerns. What is the outcome of any discussions being if there has been any movement on behalf of the regulator to meet any of those concerns? The conversations that are going on between the Scottish housing portfolio network and the regulator have been fairly positive. The meetings take place on a regular basis, and I think that we feel that there is forward progress on the strength of that relationship and the trust between the sector and towards the regulator. Can I just go back, if you will forgive me, to the point that you were making earlier on, about the guidance around the option appraisal in the event of a departure from a senior officer? The regulator, the Scottish Housing Regulator, regulates housing associations and does not regulate the sector, and I think that that is the, in some senses, the elephant in the room and the gap that that guidance is pointing at. The regulator is asking organisations to think about their position within the wider sector and the extent to which that position is efficient, effective and in the best interests of tenants. I think that the difficulty is it is asking individual organisations to do that, and there isn't a mechanism to look at the sector more generally. There is a question, and I mean to put it crudely, why are there 52 directors of housing in Glasgow? There is a question to get asked about the structure of the sector. It doesn't necessarily mean it's good or it's bad, but it brings with it costs in the way in which it's currently organised, and there isn't a way in which that issue can be debated. I think that the regulator in that guidance is pointing to that conversation, but it has no power and no locus to drive that debate any further. I think that there is a need for that debate to get had, and I hope, both in relation to the RSLs and the local authority sector, that once the current constitutional conversations are settled down and we get a chance to move on to the necessary organisation of public services, which presumably will take place at some point thereafter, there will also be a conversation about the provision of public housing and the balance in the sector, both local authority and the RSLs, which I think that conversation points to. I absolutely got to just break off from answering the question now and respond to a couple of points that Tony's made. I hope that I won't take too long over that and forgive me for... I will come to the question about discourse with the regulator. The reason there may be 50 associations and corporatives in Glasgow, look at what's happened on the ground, look at the way in which communities have changed in individual communities that are quite different from the communities up the road, and we constantly, as a forum, and we have to be careful not to get paranoid about it, but we constantly... This is the sort of stuff you can hear from whether it's from larger associations or from the local authority sector, sometimes from politicians, sometimes from civil servants, that notion that somehow there are simply too many associations. When we published a report six or eight weeks ago that showed how our members were performing on the charter, we came higher than larger housing associations and 26 landlord local authorities on every single of the main indicators that the charter looks at. The rents were somewhat lower than other associations in Scotland, so we kind of think that we're doing something right and we're providing responsive services, but also being that community anchor body that makes other things happen in that community and that that's what's been earned, that's what's been gained from having individual associations, some of which are indeed very small. My honest view is that the local authority sector perhaps needs to spend less time worrying about the size of small housing associations and looking at how long it takes to carry out emergency repairs for some of its tenants. I would like to comment on Tony's suggestion that the balance, the governance balance, is wrong throughout the sector. There will be cases and the regulators identified cases where it believes there's too much power in the staff and not enough power within the committee, but I would argue that that's not to tar the whole sector with the same brush and that there is a very challenging relationship where committees very much challenge senior staff. I'm not saying there isn't scope for more of that to happen in certain cases, but I would to say that the sector is characterised by staff ruling their committees and not being challenged. I would have to argue that and I'll finish because I know I've talked far too much by saying that we're very encouraged by the discourse with the regulator in recent months. We've met three times now. We're meeting again tomorrow with the regulator and we certainly feel that there's an open dialogue there and we hope to make progress on the issues that we've outlined. I'll just briefly touch on the options appraisal stuff as well. I think it's important to note that the sector is not one-size-fits-all. That's crucial to note and I think any sort of process that the organisation undertakes needs to be proportionate to the size of the organisation. One thing that we have come across is that there have been cases where the regulator is dictating which consultant that the organisation has to use. I don't think that that's really appropriate in terms of how the organisation itself is going to take it forward. It should be down to them who they select to actually go about it. But in terms of the SFHA and the SHR's dialogue, we do have regular meetings and our chief executives meet regularly and also we do have regular board-to-board meetings so there is a dialogue there and regular communication. Thank you very much gentlemen for your evidence this morning. Sometimes entertaining even. So I now would call a suspension of the meeting to allow witnesses to leave the room and we can move into private session.