Regulatory engagement policy

Background

The purpose of this policy is to provide a framework for regulators to initiate regulatory engagement with registered community housing providers and to facilitate growth within the community housing sector.

Definitions

Below is a list of terms, keywords and/or abbreviations used throughout this document.

• NRSCH - National Regulatory System for Community Housing.
• Regulatory engagement - A range of interactions between regulators and community housing providers—with each form of engagement having a specific intended outcome.

Scope

This policy has been agreed and adopted by all jurisdictions participating in the National Regulatory System for Community Housing (NRSCH)

Business rules

• Registrars will manage engagement with community housing providers in accordance with the provisions of the Community Housing Providers National Law (the National Law)
• all engagement with a community housing provider will be registered in the Community Housing Regulatory Information System (CHRIS).

Policy statement

The NRSCH is designed to identify, monitor and respond to risks that have serious consequences for tenants, funders and investors, community housing assets and the reputation of the sector.

Registrars support transparency and consistency of decisions about engagement interventions across jurisdictions. The essence of the framework is to provide early, helpful engagement to encourage and support providers in responsibly managing their risks and the broader risks to the sector.

Principles

The principles of good regulation that underpin the National Regulatory Code are recognised in the regulatory engagement policy.

• Proportionate – The level of regulatory engagement will reflect the scale and scope of risk to the community housing provider.
• Accountable – Decisions to engage with a community housing provider and the intended outcomes will be justified and be subject to scrutiny.
• Consistent – Regulatory engagement will be based on a consistent approach across all participating jurisdictions.
• Transparent – There will be clear and open communication with providers about regulatory engagement.
• Flexible – Adopt the most appropriate engagement pertinent to the desired outcome.
• Targeted – Regulatory engagement will be focused on the core purposes of improving tenant outcomes and protecting vulnerable tenants, protecting government funding and equity, and ensuring investor and partner confidence.

Service delivery commitment

• Performance and assessment data will be used to inform a risk based assessment of all registered providers to determine compliance with the National Law and the National Regulatory Code. This will determine the nature of regulatory engagement.
• Regulatory engagement will recognise:
  • the impact of complex business structures, for instance multi-jurisdictional providers
  • potential or actual problems and best practice arising from providers taking on development and asset management activities
  • potential or actual problems and best practice in risk management, governance and internal controls.
• Regulatory engagement will support Registrars to:
  • maintain a minimum level of regulatory engagement for consistently well-performing providers
  • develop an approach for multi-jurisdictional providers where there is an increased level of risk arising from size or the amount of money they receive for development
  • engage with providers more intensively where higher levels of risk are identified, in ways that reflect their particular circumstances.
• The appropriate level of regulatory engagement will be regularly reviewed in light of changing business focus and complexity and performance.

Regulatory engagement

The term regulatory engagement covers the full range of interactions between regulators and community housing providers—with each form of engagement having a specific intended outcome.

A regulator will, generally, engage with a provider for one or more of the following reasons:

• assessment
• collection of information
• monitoring compliance
• education
• investigation
• enforcement.

Table 1: Purpose of regulatory engagement and intended outcome

Regulatory engagement can occur at different points in the registration process, ongoing compliance process or when information becomes available to the regulator.

Detailed information in relation to regulatory engagement for the purpose of investigation and enforcement are not included in this policy. See Manage enforcement action policy and Investigation policy for further information.

Triggered engagement

Triggered engagement occurs when information becomes available to the regulator, outside of the compliance assessment process. This information may signal there is risk or good practice indicators that suggest an engagement response may be warranted or appropriate. The following trends in performance and associated indicators are used as measures of risk and good practice that in isolation or in combination could trigger a regulatory engagement response.

Information used in the determination of indicators may come from a variety of sources such as analyst insights, environmental scanning, media coverage, reporting, tenants, providers, the public and housing agencies and other government bodies. Unexpected changes in an organisation, disclosures and/or a rapid change in indicators over a given period of time is likely to give rise to a triggered engagement response.

The number of indicators would influence the regulator with regard to the intensity of the engagement. An isolated single slowly changing indicator may trigger a low level engagement response but if multiple indicators were involved that showed a rapid change, then a more probing engagement response might be triggered.