Board members and senior management teams should now be aware that Registry of Credit Unions and Industrial and Provident Societies in Northern Ireland was transferred from the Department for the Economy (DfE) to the Financial Conduct Authority (FCA) on 6 April 2018.
The remaining provisions of the Credit Unions and Co-operative and Community Benefit Societies Act (Northern Ireland) 2016 also came into force on 6 April 2018. DfE will still retain oversight for society legislation as it continues to be responsible for the policy and legislative framework.
What does this mean for housing associations here?
It is important to remember that this does not mean that housing associations in Northern Ireland are now regulated by the FCA. RHAs continue to be regulated by the Charity Commission for Northern Ireland, Housing Regulation branch (Department for Communities), HMRC and some by RQIA. Housing associations will only be regulated by FCA if separate permission is needed for a financial services business.
The FCA’s work with housing associations here will primarily involve receiving annual returns, making decisions on rule amendments and deciding whether to register new societies. During a transfer of engagements (“merger”) process some housing associations transfer into a new housing association. This part of the merger process will now involve registering a new society with the FCA. This is a new and important factor to consider when deciding on the best legal structure following merger/amalgamation.
Housing associations here along with their legal and financial advisers will now have to consider the FCA guidance (available on its website) and complete new forms when: –
- applying to register (existing housing associations are recognised by FCA and do not have to register again);
- applying to convert to a society;
- submitting annual returns and accounts;
- updating the registered office address (this is a short form with no fee);
- changing the name. This is also relatively straightforward unless the new name is undesirable or currently in use (this includes using a name which is already a company name) and a resolution also needs to be passed;
- any partial or complete amendment to the rules;
- on transfer of engagements; and
- any other application requiring registration under the Industrial and Provident Societies Acts (Northern Ireland) 1969.
Registering or converting to a Society
There is a new 12 page form to be completed and submitted to London which focusses on whether the society is conducting its business for the benefit of the community, for example, relief of poverty or homelessness through the provision of social housing. You must describe how the society’s business will deliver these benefits to the community, declare any intention to work with a specific community, explain your methods for raising funds and what you will do with your surplus/profit.
Importantly the RHA must also describe any close links a founding member or director has or intends to have with a society, company or authority. Close links include any directorship or senior position held by director or founding members of the society in other organisations.
Conversion also requires a special resolution to be passed by the members and confirmation that no proposed director is disqualified. Housing associations in Northern Ireland are also registered charities and must also state its charitable purpose on the form.
There are two different forms for rule amendments as before; partial and complete amendments. In the partial rule amendment form the RHA must state any significant commercial arrangements that it has, or had, with any other organisation that could create, or be perceived as creating, a conflict of interest. The housing association must then explain how it ensures that any such conflict of interest does not prevent the society from acting for the benefit of the community and enclose a sworn statutory declaration.
The fees for rule amendments are now higher with a maximum of £950.00 for not using the model rules.
For the first time housing associations also need to pay an annual compulsory fee which is dependent on the size of the housing association’s assets: –
- Smaller societies (with £50,000 assets and below) must currently pay £65.00 per year;
- Larger societies (with £1m assets and above) must currently pay £480.00. There is a sliding scale of fees.
Housing associations must remember to update its letter head and website e.g. “‘[Society name] is registered by the Financial Conduct Authority”.
The senior management team should update the Board to ensure that each board member is aware of these changes. This is very important as the Board are individually and collectively responsible for ensuring that the society complies with its legal obligations.
If you require any advice or assistance on the FCA regime, the new legislative changes or the legal duties and liabilities of board members please contact Catherine Cooney, Partner in the Corporate, Commercial & Charity Department of Worthingtons Solicitors. Catherine has particular expertise in working with housing association boards and their senior management teams and advises on a range of issues including duties and liabilities of charity trustees, legal obligations of a registered charity, protecting your charity, corporate governance, conflicts of interest and mergers amongst others.