Non-compliance and de-registration

The National Law gives Registrars the power to take enforcement action if the Registrar reasonably believes a provider is not complying with the community housing legislation of a participating jurisdiction (section 17 of the National Law).

Principles

Registrars have enforcement powers to ensure that tenants and community housing property are protected in the event that a provider does not comply with the National Law (including the National Regulatory Code).

The enforcement approach is based on a spirit of encouraging providers to remedy non-compliance, before a Registrar takes enforcement action. Providers self-assessing and Registrars identifying potential non-compliance early is encouraged to promote a culture of compliance as industry best practice.

Applying principles of good regulation

Where there are issues of non-compliance, the National Law gives Registrars a range of enforcement powers based on the following principles of good regulation:

  • proportionate – enforcement powers will be used only when necessary and in a way that is appropriate to the assessed level of risk
  • accountable – able to justify regulatory assessments and be subject to scrutiny
  • consistent – enforcement will be consistent regardless of the jurisdiction in which the provider operates
  • transparent – there will be clear and open communication with providers about enforcement processes and decisions. 

Approach to non-compliance

Registrars encourage compliance by providing guidance on the performance and legal requirements that providers must meet under the National Law and the National Regulatory Code.

When a risk or series of risks result in non-compliance, a Registrar will use a staged and escalated approach to bringing the provider back to compliance, where the Registrar considers this approach to be appropriate. This recognises that early, open and cooperative enforcement can bring about the quickest and most effective return to compliance in the majority of cases, and is least intrusive into the affairs of independent providers.

If the matter is not serious or urgent, a Registrar will endeavour to work cooperatively with the provider to address issues of non-compliance in the first instance; that is, through regulatory measures.

Where a provider is unable or unwilling to sufficiently address issues of non-compliance, or where the non-compliance is significant, a Registrar may use enforcement powers to bring the provider back to compliance or cancel its registration.

The preferred approach is for a Registrar to progressively escalate the Registrar’s responses until a provider returns to compliance. While this is the preferred response, a Registrar may move to any level of enforcement response permitted by the National Law, if the circumstances warrant it.

For example, there may be situations where it is appropriate for the Registrar to move straight to a notice of intent to cancel the provider’s registration.

The escalating approach to non-compliance is depicted in Figure 1.

Escalating approach to non-compliance showng a pyramid.
The escalating approach to non-compliance

Information and inspection powers

Under a provider’s conditions of registration set out in section 15 (2) of the National Law, a Registrar may require the provider to do any or all of the following:

  • produce information about the provider’s affairs or the exercise of its functions, including information about arrangements with others regarding the exercise of its functions, and including copies of documents or records
  • ensure that a suitably qualified officer of the provider attends a meeting with the Registrar to answer questions about the affairs of the provider
  • allow the Registrar to carry out an inspection of the provider’s premises or records, at any reasonable time.

A Registrar will not require information that identifies anyone who lives in residential premises, or require entry to residential premises occupied by a person, unless that person consents.

A Registrar will ensure all information is collected and handled in accordance with applicable information and privacy laws.

A Registrar will ensure that requests to a provider to supply information, or to inspect records or premises, relate to its assessment of whether the provider is complying with the National Law. In making such requests, a Registrar will document or refer to published reasons as to why the Registrar needs the information to make an assessment of compliance.

Triggers and scope of enforcement actions

The enforcement powers in the National Law are framed broadly to allow Registrars to undertake proportionate and targeted action based on their judgement of the consequences of a provider’s non-compliance with the National Law.

The triggers and scope of enforcement action described in the following section are intended to be illustrative of how the principles of good regulation are applied but are not exhaustive because it is not possible to identify all possible situations where enforcement action may be justified.

Notice of non-compliance (section 18 of the National Law)

The situations in which a Registrar could consider issuing a notice of non-compliance include, but are not limited to, situations where the provider has failed to comply with the community housing legislation and either:

  • the non-compliance is not trivial or administrative in nature
  • the non-compliance is repeated
  • the non-compliance is wilful, systemic in nature, or involves dishonesty, or
  • the provider has a history of non-compliance and/or a poor response to rectifying non-compliance.

When issuing a notice of non-compliance, a Registrar must:

  • identify the matters required to be addressed in order to avoid cancellation of the provider’s registration for not complying with the community housing legislation
  • specify a reasonable period in which those matters are to be addressed
  • provide a copy of the notice to the Registrar for each participating jurisdiction.

Where the provider is willing and able to remedy the non-compliance, the Registrar may issue subsequent notices of non-compliance providing an extended period to address the matters of non-compliance. The situations in which a Registrar could consider issuing subsequent notices of non­compliance include, but are not limited to, situations where remedial action by the provider is well underway but not complete, or where remedial action by the provider relies on the action of a third party that is underway but not complete.

Binding Instructions (section 19 of the National Law)

A Registrar may give written instructions to a provider about the way the provider should address any matter that is the subject of a notice of non-compliance issued to the provider.

The situations in which a Registrar could consider giving Binding Instructions include, but are not limited to, situations where either:

  • the provider has not addressed a matter identified in a notice of non-compliance within the specified period and the Registrar has reasonable concerns about the willingness or capacity of the provider to identify an appropriate manner in which to address the matter, or
  • the Registrar forms the opinion that the provider lacks the willingness or capacity to identify an appropriate manner in which to address a matter that is identified in a notice of non-compliance that has been issued, or will be issued at the same time as the Binding Instructions are given.

Binding Instruction require action to rectify a matter identified in a notice of non-compliance either previously given to the provider, or given to the provider at the same time as the Binding Instructions. For example, Binding Instructions may:

  • require action to address significant deficits in the skills, experience and performance of a provider’s board through changes to board membership (in response to a non-­compliance related to performance outcome 4 of the National Regulatory Code)
  • require action to remedy a serious breach of probity through changes to the provider’s systems for preventing, detecting, reporting on and responding to instances of fraud, corruption and criminal conduct (in response to a non-compliance related to performance outcome 5 of the National Regulatory Code)
  • requiring action to prevent a significant risk of insolvency (in response to a non-compliance related to performance outcome 7 of the National Regulatory Code)
  • requiring action to ensure that tenants are housed to a reasonable standard (in response to a non-compliance related to performance outcome 1 of the National Regulatory Code).

Consistent with the principles of good regulation, a Registrar will try to avoid unnecessary prescriptions and impositions on how providers organise their business, provided that this does not limit the Registrar’s ability to require action that will significantly improve the ability of the provider to rectify non-compliance.

Notice of intent to cancel registration (section 20 of the National Law)

A Registrar may issue a Notice of Intent to Cancel Registration where :

  • the provider has not addressed the matters identified in a notice of non-compliance within the period specified in the notice
  • the provider has not complied with Binding Instructions issued to the provider within the period specified in the instructions, or
  • the provider’s failure to comply with the community housing legislation is serious and requires urgent action.

When issuing a Notice of Intent to Cancel Registration, a Registrar must:

  • specify the matters the Registrar considers warrant cancellation of registration, and
  • specify a reasonable period of at least 14 days for the provider to satisfy the Registrar that its registration should not be cancelled.

A Registrar may extend a notice of intent to cancel, at the request of the provider, if there are good reasons for doing so. This may include situations where remedial action by the provider is well underway but not complete, and the provider has demonstrated the willingness and capacity to pursue the remedial action.

Appoint a statutory manager (section 21 of the National Law)

The situations in which a Registrar can appoint a statutory manager are where:

  • a notice of intent to cancel registration has been issued to the provider, or
  • the Registrar forms the opinion that the provider has failed to comply with the community housing legislation or binding instruction and the provider’s failure to comply is serious and requires urgent action.

In appointing a statutory manager, a Registrar is attempting to protect tenants and/or community housing assets in circumstances where the provider lacks the willingness or capacity to bring itself back to compliance or to manage its affairs in an orderly way before its registration is cancelled. Examples of where a provider will be considered to lack this willingness or capacity are where:

  • the provider lacks a properly constituted governing body, to put a governing body in place and hand back control of the provider to the new governing body
  • the provider lacks the willingness or capacity to undertake actions necessary to transfer community housing assets to another registered provider following the issuing of a notice of intent to cancel their registration
  • a bank triggers an agreement between itself, the provider and a government housing agency because of a default on a financial covenant and the provider lacks the willingness or capacity to undertake actions necessary to meet its obligations under the agreement
  • the provider lacks the willingness or capacity to undertake actions necessary to protect tenants from eviction following a secured creditor or corporate regulator appointing a receiver or administrator.

Consistent with the principles of good regulation, and the National Law, appointing a statutory manager should avoid any unnecessary prescriptions and impositions on the affairs and activities of the provider that do not relate to the community housing activities and assets of the provider in undertaking functions necessary to protect tenants and community housing assets.

The Registrar will usually specify an initial period of appointment for the statutory manager. The Registrar can amend the period of appointment for the statutory manager. While there is discretion in the period of appointment, it is expected that in ordinary circumstances a statutory manager would be appointed for between three and six months, and in complex circumstances for no more than 12 months.

A statutory manager’s expenses while conducting the affairs and activities of a registered community housing provider are payable by the provider.

Notice of cancellation of registration

A Registrar may issue a Notice of Cancellation of Registration where:

  • the provider has been wound up
  • the provider has applied for cancellation, or
  • the Registrar has issued a notice of intent to cancel registration and the provider has not, within the time specified in the notice, satisfied the registrar that its registration should not be cancelled.

If the notice of cancellation of registration follows a notice of intent to cancel registration, a Registrar will list the reasons for cancellation and the date of effect of cancellation.

A Registrar will only cancel the registration of a provider once all tenancies and each community housing asset of the entity in each participating jurisdiction has been transferred or otherwise dealt with in accordance with the community housing legislation of a participating jurisdiction that applies to the tenancies and asset.

Deciding to take enforcement action

Registrars generally take enforcement action if non-compliance is significant and requires more than regulatory engagement to ensure change is made and compliance is achieved.

Before taking enforcement action, the Registrar will consider, and balance, the interests of:

  • tenants of the provider
  • the provider, in respect of the community housing portion of its business activities
  • secured creditors and government housing agencies, to the extent required by the community housing legislation of a participating jurisdiction
  • other relevant interests, consistent with the object of the National Law to promote confidence in the good governance of registered community housing providers so as to facilitate greater investment in that sector

Consistent with the principles of good regulation, a Registrar will not take enforcement action that is likely to leave the provider less able to comply with the National Law or less able to remedy the compliance issues identified by the Registrar.

Serious and urgent matters

A matter will be serious and requires urgent action where the provider’s failure to comply creates a risk that is likely or certain to crystallise and is significant or severe in its consequences for community housing tenants or assets.

A serious and urgent matter requires the Registrar to take enforcement action to ensure that tenants and community housing assets are appropriately protected.

A matter that is serious and requires urgent action includes, but is not limited to:

  • an act, omission or event that endangers the safety or security of tenants
  • a significant threat to the financial viability of the provider
  • a significant fraud, theft, corruption or dishonesty by an employee or member of the board of the provider

A Registrar may also consider other matters are serious and urgent based on a risk assessment that considers the consequences of failing to take enforcement action.

The seriousness and urgency of non-compliance is considered according to a risk matrix to determine the appropriate enforcement action, as illustrated in Figure 2.

Publication of enforcement action

A Registrar must record the following enforcement action on the National Register of Community Housing Providers

  • a copy of any Binding Instruction issued to a provider
  • a copy of any Notice of Intent to Cancel Registration
  • details of any appointment of a statutory manager, including a copy of the relevant instrument of appointment, and
  • whether a provider’s registration has been cancelled, and details of any cancellation, including a copy of any Notice of Cancellation issued.

Registrars may record the issue of a Notice of non-compliance on the National Register under Section 12 (2)(j) of the Community Housing Providers National Law.


Last updated:

09 Aug 2022

Was this content useful?
We will use your rating to help improve the site.
Please don't include personal or financial information here
Please don't include personal or financial information here

We acknowledge Aboriginal people as the First Nations Peoples of NSW and pay our respects to Elders past, present and future. We acknowledge the ongoing connection Aboriginal people have to this land and recognise Aboriginal people as the original custodians of this land.

Top Return to top of page Top