Langstane putting measures in place to address failings, says Regulator



Langstane Housing Association is to co-opt two additional members to its governing body as part of a series of measures intended to address “serious and urgent risks” to the organisation’s governance and financial planning, management and control.

The move comes as the Scottish Housing Regulator said it has put the Association on ‘high’ engagement after further failings were identified by the RSL.

During 2017/18 the Regulator engaged with Langstane around the implementation of its business plan and asset management strategy, including its progress towards achieving SHQS compliance for the remaining non-compliant properties. It also reviewed its supporting financial information to gain assurance about its strategic direction and financial capacity to deliver its objectives.

With Langstane being one of the larger developers of new affordable housing in Scotland, the Regulator also engaged with Langstane about its plans to raise additional funding to support its business strategy and development plans.

Around 18 months ago Langstane became aware of weaknesses in its approach to financial management and control, and in particular the provision of accurate and timely financial information to its leadership team, governing body and key stakeholders.

Langstane engaged openly with the Regulator and commissioned an independent investigation into this. It then developed and implemented an action plan to address the findings of the investigation.

However, in an updated regulation plan for Langstane which was published this month, the Regulator said Langstane has more recently become aware of further failings in its business and financial planning, control and monitoring framework which have” resulted in the reporting of inaccurate financial information”.

As a result, the organisation’s leadership has been “unable to monitor and accurately report on its financial position or the delivery of its plans”. And it has been “unable to prevent serious breaches of policy from occurring and has failed to detect them timeously when they have occurred”.

Acknowledging the failings, Langstane is continuing to engage openly and constructively with the Regulator as it develops its strategy to address the weaknesses and ensure compliance with the regulatory standards of governance and financial management. It also recognises that it needs to quickly address the gaps in its leadership and governance capacity to allow it to deal with these issues.

It is putting in place measures to deal with its short term funding requirements and will develop a sustainable medium and long term treasury strategy that is consistent with a revised business plan. It has commissioned an independent review of its financial planning and management information to ensure that it always has access to accurate and up-to-date financial information. It is also arranging interim financial planning and management support and ongoing treasury advice.

Langstane will also commission an independent review of its governance and financial management to assess compliance with the regulatory standards.  This will prioritise a review of compliance with standard 3 (the RSL manages its resources to ensure its financial well-being and economic effectiveness) and will include an investigation into the financial planning and management policies, processes and practices that have caused its current financial and governance issues.

Langstane currently has eight governing body members. It recognises that it needs additional members with appropriate skills and expertise to strengthen its governing body and will co-opt two members. It will also carry out a skills-based recruitment exercise after the governance review has been completed.



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