Dr. Mary Lee Rhodes:

We are pleased to be here this morning to assist the committee in its review of the oversight and regulation of approved housing bodies. I am accompanied by my colleagues, Ms Susanna Lyons, head of regulation and Mr. Pat Fitzpatrick, approved housing body services.

The interim regulatory committee was set up in 2014 by the then Minister of State, Deputy Jan O'Sullivan, as a non-statutory committee to oversee the implementation of the voluntary regulation code for the approved housing body sector and to advise the Department on the development of statutory regulation. The regulation office was established to implement the code, pending enabling legislation. It sits within with Housing Agency and is overseen by the interim regulatory committee. After five years of development and operation of the voluntary code, we have a robust regulatory framework to which a large number of AHBs have voluntarily signed up and which is being applied transparently, effectively and with meaningful consequences for non-compliance.

For brevity, I will henceforth refer to approved housing bodies as AHBs and the interim regulatory committee as the IRC. As members will be aware, there are four statutory agencies with relevant oversight responsibility for various aspects of AHBs. These are local authorities, the Residential Tenancies Board, the Charities Regulator and, for some AHBs, the Health Information and Quality Authority. However, as pointed out by the Comptroller and Auditor General in his recent annual report, the AHBs nevertheless "function as arms-length bodies with their own legal status and with the capacity to transact business in accordance with their own constitutional arrangements".

Until the establishment of the voluntary regulation code, there was no active, centralised oversight of these organisations following their approval as AHBs. The voluntary regulatory code was launched in 2013 and set out key requirements relating to governance, financial viability and performance management to which all AHBs signed up to the code are required to adhere. The regulatory framework has developed over the past five years, with the establishment of the governance, finance and performance standards and related protocols.

Oversight has increased significantly through the regulation office and the IRC, and the AHB sector has demonstrated advancement relating to best practice and compliance across all areas of the regulatory requirements. The current framework provides for an open, transparent, proportionate, and risk-based regulation based on the principles of comply or explain. Larger AHBs and those planning significant growth are subject to more rigorous regulation than smaller ones.

Each year the regulation office issues an annual report and sectoral analysis with detailed information on housing stock, funding and finance, staffing, assets and performance management, thereby providing an important overview of the AHB sector. More importantly, each year the regulation office reviews the annual returns provided by the AHBs and issues an assessment report and assessment outcome. The assessment outcome is linked to eligibility for Government funding and is required by the Housing Finance Agency in order to approve loan finance.

In the 2017 to 2018 cycle, 83% of AHBs signed up to the code demonstrated substantial compliance, with 9% requiring additional written clarification. Where areas of non-compliance relating to governance, financial viability or performance management were identified, organisations were required to enter into a process of engagement with the regulation office. A total of 14 AHBs were deemed to require ongoing engagement to bring them into compliance. Following due process and due diligence, three AHBs were deemed unsatisfactory due to significant non-compliance and the Department was informed of these. As of September 2018, the IRC also provides a list of all AHBs in engagement to the Department. Circular 15/2016 states that only those AHBs having received a satisfactory assessment will be eligible for funding from the Department.

However, a statutory regulatory body would have investigation and enforcement powers which are currently absent from the existing voluntary framework. The absence of these powers and the existing terms of reference of the IRC limit the ability of the regulation office to go beyond deeming an AHB to be unsatisfactory. In addition, the lack of a statutory basis for the regulator impacts on the ability of other Government agencies to enter into memoranda of understanding regarding protocols, a situation that can delay appropriate follow-up on significant issues.

That brings us to the other subject of this invitation, on the nature of the interactions between the IRC and the Department of Housing, Planning and Local Government. I have already outlined the interaction in relation to the voluntary regulation code and note that an official from the Department is a member of the IRC. As stated in the introduction, the IRC has two main objectives, the second of which is to advise the Department on the development of statutory regulation. That was a substantial element of the IRC's work to June 2017. After that date, the ongoing work to bring legislation to the Government has largely been in the hands of the Department, with the IRC providing input on an as-requested basis. A new draft of the proposed legislation has recently been provided to members of the IRC and discussion of same will be on an upcoming agenda.

At the request of the Department, the IRC is reviewing its terms of reference and protocols between the Housing Agency, the regulation office and the Department of Housing, Planning and Local Government. Those are being reviewed in light of questions around the sustainability of the existing framework in advance of the introduction of a legislative framework.

In conclusion, the establishment of the voluntary regulation code and the regulatory framework developed by the IRC and the regulation office has provided proactive centralised oversight of organisations following their approval as AHBs. This ensures public investment in AHBs signed up to the code is safeguarded. It also provides assurance to key stakeholders, lenders and investors that the AHB sector is well governed, well managed and financially viable. The regulatory framework established has been successful to date. It has, however, a number of limitations, as highlighted above. It is important that the framework advances to a statutory footing, with the appropriate independent powers and functions, as soon as possible. A statutory regulatory body will be of significant benefit to tenants, the AHB sector itself, the Government, local authorities, lenders and, in future, investors. I thank the committee and I will endeavour to answer any questions.