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Housing (Amendment) (Scotland) Act 2018

Regulatory intervention by Scottish Housing Regulator

Section 1 – Managers appointed by, or on the requirement of, the Scottish Housing Regulator

11.The Regulator has a number of powers under the 2010 Act that allow it to appoint a manager, or to require a social landlord (including an RSL) to appoint a manager.

Section 57 – Appointment of manager for housing activities

12.Under section 57, the Regulator can appoint a person as manager if the Regulator considers the social landlord is, or is at risk of, failing in a number of respects (including that the landlord is failing to achieve a standard or an outcome set out in the Scottish Social Housing Charter(3) or that the landlord is failing to comply with an enforcement notice4) and that a person needs to be appointed to ensure that the social landlord provides housing services to an appropriate standard. While the person can be appointed to manage the social landlord’s housing activities generally, or just aspects of its activities, there is no express link between the failure which led to the manager’s appointment and the activities the person will manage, nor is there any express provision limiting the period of the manager’s appointment (although there is provision in section 59(1) for the Regulator to determine that period).

13.Section 1(2) of the Act amends section 57(1)(b) and (2) so that a person can be appointed as a manager but only to ensure that the social landlord rectifies the failure which the Regulator has identified.

14.Section 1(2) also amends section 57(1)(a) so that a manager can be appointed only where the social landlord has failed or is failing to achieve a standard or outcome set out in the Charter, or in some other respect, rather than where the landlord is only at risk of so failing.

15.In addition, section 1(4) amends section 59 by inserting a new subsection (1A) to limit the period of the manager’s appointment to the period necessary to rectify that failure.

Section 58 – Appointment of manager for financial or other affairs

16.Section 58 of the 2010 Act relates to RSLs (and, unlike section 57, not all social landlords) and allows the Regulator to appoint a person as manager where it considers this is necessary to ensure the RSL manages its financial or other affairs to an appropriate standard.

17.As is the case with section 57, while the person can be appointed to manage the RSL’s financial or other affairs generally, or just aspects of those affairs, there is no express link between the failure which led to the manager’s appointment and the matters the person will manage, nor is there any express provision limiting the period of the manager’s appointment.

18.Section 1(3) amends section 58 by inserting a new subsection (1). This replaces the existing subsection and provides that the manager may be appointed only where the RSL is failing or has already failed to comply with a statutory duty (imposed on it by the 2010 Act or by other legislation) or where the RSL has failed or is failing to comply with a requirement imposed on it by the Regulator. Examples of the latter would include where the RSL has failed or is failing to comply with the Regulator’s requirement to address a failure to achieve standards of financial management and governance set out in the code of conduct under section 36 of the 2010 Act, or the Regulator’s requirement to achieve financial management or governance targets set by the Regulator under section 37 of the 2010 Act.

19.The test for appointing a manager is that the appointment is necessary to rectify the failure identified by the Regulator.

20.New subsection (1A), inserted into section 59 of the 2010 Act by section 1(4), also has the effect of limiting the period of the manager’s appointment under section 58 to the period necessary to rectify that failure.

Section 59 – Appointment of managers: supplementary

21.Section 59 of the 2010 Act makes provision about the appointment of managers under sections 57 and 58. In particular, section 59(4) provides that such a manager has a duty to comply with directions about the performance of the manager’s functions given to the manager by the Regulator and may be removed if the manager fails to comply with those directions.

22.There is, as before, no express link between the failure that led to the manager’s appointment and the functions in relation to which the Regulator may give the manager directions.

23.Section 1(4) replaces section 59(4) with new subsections (4) and (4A). While retaining the power of the Regulator to give directions, the duty of the manager to comply with those directions and the Regulator’s power to remove a manager who fails to do so, these new subsections provide that the directions can relate only to rectifying the failure that led to the manager’s appointment. Subsection (4A)(b) also clarifies that it is the Regulator who can remove a manager who fails to comply with a direction, even where the manager was appointed by the RSL under section 57 or 58 (rather than having been appointed directly by the Regulator).

Section 87 – Manager of registered society: extra powers

24.Part 7 of the 2010 Act covers the Regulator’s powers where an RSL is about to become insolvent and includes provision imposing a moratorium on the disposal of an RSL’s land(5) and giving the Regulator power to appoint, or require the RSL to appoint, an interim manager under section 79 of the Act to manage the RSL’s affairs during the moratorium. During the moratorium, the Regulator may make proposals for the future ownership and management of the RSL’s land(6) and may also appoint a manager to implement those proposals under section 85 of the Act.

25.Section 87 of the 2010 Act provides for certain extra powers exercisable by such a manager where the RSL is a registered society,(7) including the power to make and execute instruments providing for the amalgamation of the society and for transferring the society’s engagements.

26.Section 1(5) of the Act amends section 87(3) and (4) to update references to sections of the Co-operative and Community Benefit Societies and Credit Unions Act 1965 with references, instead, to the equivalent sections of the Co-operative and Community Benefit Societies Act 2014, which has replaced the 1965 Act. The Act replaces and updates a number of such references to the 1965 Act to ensure that the provisions in the 2010 Act work as they should.(8)

3

Prepared and published by the Scottish Ministers under Part 3 of the 2010 Act.

4

Issued by the Regulator under section 56 of the 2010 Act.

5

See section 75 of the 2010 Act.

6

See sections 80 to 90 of the 2010 Act.

7

Section 165 of the 2010 Act defines “registered society” as a society registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 (but see now section 6(16) of the Act which amends that definition).

8

See, for instance, sections 2(7) and 7(4) of the Act. Although there is provision in the Co-operative and Community Benefit Societies Act 2014 which will “translate” references to repealed provisions into references to the equivalent provisions in the 2014 Act (see schedule 5, paragraph 3), the Government considers it is more helpful to the user of the 2010 Act to update these references in this Act.

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