The GSA Way Isn’t Working.
We are currently carrying out a formal consultation with GreenSquare customers to get their views on the proposed merger and are sending letters to customers asking for their feedback. In the letter, we explain that we think that a merger with Accord would provide an excellent opportunity to expand and enhance our locally-focused services to customers across a wider operating area. Alongside more new homes and better local services, we could invest more in the fabric of the homes and neighbourhoods we have already.
The expect the larger organisation would have more resources – and increased numbers of homes in places where our current operating areas meet, including in Oxfordshire. This would make it possible for us to deliver new and improved services for all, including in localities where this hasn’t always been feasible. We think this merger of equals would create a stronger and more resilient organisation better able to deliver the corporate plan priorities outlined below.
Extract from Email sent to me by Ruth Cooke, CEO (August 27th, 2020)
An ambitious vision indeed. While I approached these promises at the time with a pinch of salt, like I assume many of us did, including her board, there was hope that Ms. Cooke would be able to deliver on the promises made. However, we must all now accept the sobering reality, there is a stark disparity between promise and outcome.
The email, laden with optimism and strategic foresight, predicts growth, expansion, and enhanced services—a vision that must have resonated with stakeholders and customers alike. The proposed merger was heralded as a gateway to a brighter future, one where resources would multiply, services would flourish, and communities would thrive.
So now we must ask, where did it all go wrong.
Good Intention?
t's important to consider that while good intentions may have played a role, other factors such as corporate survival or potential financial gains cannot be dismissed. In a competitive landscape where the fear of being overtaken by rival providers looms large, decisions often stem from a pragmatic need to secure organisational longevity and autonomy.
While we can assume the presence of good intentions, it's equally plausible that corporate considerations, including the avoidance of being absorbed by another entity, may have influenced the decision-making process. Balancing these competing interests requires a nuanced understanding of the broader context in which such decisions are made.
With that said, let me refrain from putting words in Ms. Cooke’s mouth. In an extract from the same email, she states:
I have spent nearly all of my working life in housing and I am absolutely passionate about providing great quality landlord services to our customers. We've recognised the need for GreenSquare to refocus its efforts on being a great landlord and have launched a three-year corporate plan to deliver this change.
The plan features much that will benefit customers, including:
• transforming our contact centre, so that we can fully resolve most queries straight away;
• strengthening the ways in which we obtain feedback and collaborate with customers and use what we learn to ensure customers are at the heart of change and decision making;
• continuing to improve our health and safety and compliance management so that the safety of customers in their homes is assured;
• transforming our repairs and maintenance service; ensuring all existing properties meet a ‘GreenSquare standard’ which ensures that a property is safe, warm, and affordable, with modern components; and
• providing 1,500 new homes for truly affordable rent and home ownership between now and 2023.Although, as mentioned above, we think a merger with Accord will result in more resources being available to deliver these plans, GreenSquare is already financially strong. We recently completed work to harmonise terms with existing and new lenders and agreed new revolving credit facilities and borrowing. This puts us in a really healthy position to manage the business more effectively and gives us increased capacity going forward, supporting the development of more new homes and better services for our customers. I hope that this additional information is of interest and gives you assurance of my commitment, and that of GreenSquare’s leadership team, that we are moving forwards.
Extract from Email sent to me by Ruth Cooke, CEO (August 27th, 2020)
Whatever the reason behind the merger, I'll have to leave to more learned people than me to decide. After all, we do not have all the internal knowledge to make a fair and correct assumption on the primary decisions that led to the merger between GreenSquare and Accord. But what we can do is assess it now with hindsight, has it improved the service provided? Are residents' homes better maintained? Has the working environment improved for the staff? Has it been a benefit for all or just the investors and backers?
Due Diligence with Your Due Diligence
Due diligence is a critical process, it isn’t something you should take lightly or rush. Rushing through due diligence can lead to significant pitfalls and risks that may undermine the success of any merger.
Conducting thorough financial due diligence helps assess the financial health of both organisations. Rushing through this process may result in overlooking financial liabilities, hidden debts, or discrepancies in financial statements, which can have long-term implications for the merged entity's financial stability.
Housing providers are subject to various legal regulations and compliance requirements. Rushing due diligence may result in overlooking legal risks, such as regulatory violations, unresolved legal disputes, or inadequate contracts, which could lead to legal liabilities and penalties post-merger.
Understanding the operational intricacies of each organisation is essential for a successful merger. Rushing through due diligence may result in overlooking operational challenges, such as incompatible systems, cultural differences, or workforce redundancies, which can impede the smooth integration of operations post-merger.
Housing providers, as we know, play a crucial role in their communities, and mergers can have a significant impact on residents and stakeholders. Rushing through due diligence may result in neglecting to assess the potential community impact, such as changes in service delivery, disruptions to residents, or loss of community trust, which can damage the reputation and goodwill of the merged entity.
Merging two housing providers requires careful consideration of strategic alignment and compatibility. Rushing through due diligence may result in overlooking strategic misalignments, such as divergent missions, incompatible visions, or conflicting priorities, which can hinder the achievement of synergies and shared goals post-merger.
Rushing through due diligence increases the likelihood of overlooking critical issues, leading to potential pitfalls that could jeopardise the success of the merger. Taking the time to conduct thorough due diligence is paramount to mitigating risks and maximising the chances of a successful and sustainable merger.
Did GreenSquare and Accord rush through this process?
At the time, during an in-depth assessment, concerns were raised by the Regulator of Social Housing regarding GreenSquare's communication practices, noting a lack of timeliness and proactive engagement. Additionally, the regulator highlighted the need for GreenSquare to bolster its co-regulatory and transparency arrangements.
The assessment also identified that while GreenSquare possessed the financial capacity to handle a reasonable range of adverse scenarios, it was imperative to manage material risks to ensure continued compliance. GreenSquare's moderately high level of debt in relation to its turnover, coupled with the requirement for additional funding to execute its plans, diminished its capacity and flexibility to address downside risk effectively. Consequently, ongoing management was deemed necessary to maintain compliance.
By May 2020, GreenSquare had successfully negotiated a comprehensive financial deal with both new and existing lenders, securing approximately £350 million of existing debt, £140 million of new revolving credit facilities, and an additional £50 million of borrowing in collaboration with BlackRock’s European Infrastructure Debt team.
Ruth Cooke, quoted on the GreenSquare website, hailed the achievement as a significant success, particularly in challenging market conditions. She highlighted the enhanced borrowing capacity gained from the deal, emphasising its pivotal role in supporting the development of new homes and improving services for customers.
To navigate the complexities of the financial arrangement, GreenSquare enlisted the expertise of legal advisors. The group's leadership expressed gratitude for their invaluable support, recognising their instrumental role in achieving the refinancing and treasury harmonisation goals.
Despite any prior delays in addressing property-related issues, due diligence was swiftly conducted within a short timeframe, demonstrating exceptional efficiency even amid challenging market conditions.
GreenSquare's corporate plan underscored its commitment to becoming a "simply brilliant" landlord, focusing on enhancing value for money, customer service, and governance practices. Despite past regulatory scrutiny, lenders expressed confidence in the leadership team and the organisation's improvement plan. The finance team remained vigilant in navigating the ongoing impacts of COVID-19 on various aspects of the financial plan, ensuring continued financial resilience and stability.
So, no, due diligence was rushed through, and this haste was celebrated as an achievement for all to be proud of. Had the merger been a success, perhaps praise would have been warranted. However, it wasn’t long before the first signs of trouble were spotted.
The First Warning Sign
GreenSquareAccord breached the English regulator’s Home Standard after it was discovered that hundreds of its homes lacked current fire risk assessments and over 10,000 properties had never undergone electrical inspections. This revelation, outlined in a regulatory notice from the Regulator of Social Housing (RSH), raised serious concerns regarding fire safety and asbestos management, posing potential risks to tenants.
Following a self-referral by GreenSquareAccord, the association's chair, Elisabeth Buggins, found herself either thrown under the bus or chose to fall on the sword in response to the findings, you decide.
The association attributed some overdue fire risk assessments to COVID-19 restrictions but acknowledged systemic failures within the former stock of Accord, one of the merging entities.
This wasn't the first instance of scrutiny for GreenSquare, as it previously breached the Home Standard for fire safety in 2019. Despite regaining a satisfactory governance rating in 2020 after improvements, this breach raised questions about the effectiveness of its safety protocols.
GreenSquareAccord committed to rectifying the failures and initiated a program to address the deficiencies. The regulator opted not to take immediate enforcement action but closely monitored the association's remediation efforts.
In her statement, Ruth Cooke expressed regret over the breach and pledged transparency in rectifying the situation. Internal investigations revealed lapses in assessments and record-keeping, prompting urgent corrective measures.
The Complaints Keep Coming!
The merger resulted in a series of concerning issues identified by the Housing Ombudsman, ranging from severe maladministration to systemic failures in addressing tenants' concerns.
Over a three-month period, the Ombudsman made six findings of severe maladministration in three separate cases involving GreenSquareAccord. These cases revealed significant deficiencies, including pest infestation, noise nuisance, and delays in repairs, raising serious questions about the organisation's management and operational practices.
In Case A (202204859), severe maladministration was found after GreenSquareAccord failed to address a pest infestation promptly, leaving the issue unresolved for several years. Despite repeated reports by the resident and recommendations from environmental health authorities, the landlord failed to take adequate action, leading to prolonged distress for the tenant. The Ombudsman ordered corrective actions, compensation, and staff training to prevent similar incidents in the future.
Case B (202101087) involved severe maladministration in handling a noise nuisance complaint, demonstrating a lack of responsiveness and empathy towards the affected resident. The landlord's mishandling of the complaint, coupled with inadequate record-keeping and communication, exacerbated the resident's distress. The Ombudsman mandated an apology, compensation, and a comprehensive review of the landlord's policies and staff training.
In Case C (202202664), severe maladministration was identified in repairs during the void period and after the resident moved in. The landlord's failure to address essential repairs promptly, coupled with inadequate communication and inappropriate expectations from the tenant, demonstrated systemic shortcomings in its maintenance procedures. The Ombudsman ordered remedial actions, compensation, and a review of repair procedures to prevent future lapses.
These cases (along with many others) prompted the Housing Ombudsman to launch a special investigation into GreenSquareAccord under paragraph 49 of the Housing Ombudsman Scheme, highlighting the severity of the issues and the need for systemic improvements. While the landlord claims to have implemented policy enhancements and a more robust complaints handling system, these incidents underscore the critical importance of rigorous oversight and accountability in the housing sector.
In all three of these cases, the landlord failed to fulfil some of its basic responsibilities which resulted in evident detriment to its residents.
There are common failings across these cases. On multiple occasions, there were excessive delays and communication often poor, with resident reports being ignored or them left in the dark about the actions the landlord would be taking. The landlord failed to follow its own policies or handle complaints effectively and in line with our Code, and, in one case, inadequate record keeping.
“A number of these issues arose following its merger between two substantial housing associations – a wider issue for the sector we highlighted in our Spotlight report on Knowledge and Information Management.
“I welcome the landlord’s actions following our decisions. It has multiple open cases which we have identified as high or medium risk.
“Therefore, we have decided that we will be opening a special investigation into the landlord. We will present the findings of that report following an in-depth look at some of the issues the landlord is facing and I welcome its ongoing engagement with this process.
Richard Blakeway, Housing Ombudsman - 7th September 2023
And what did Ruth Cooke blame these and other issues on? Challenges they faced following their merger in April 2021.
We take complaints very seriously and we are sorry the customers involved in these cases did not receive the level of service they should have.
We have fully complied with the Housing Ombudsman’s orders in each case and taken learnings from them forward. This includes apologising to the customers, compensating them, completing any follow-up work required, and updating our policies and procedures.
Most of the cases the Housing Ombudsman has dealt with reflect the ongoing challenges we faced following our merger in April 2021, when we were still agreeing a single process for handling complaints and bringing together a complex set of policies and procedures across our operational services.
We now have a much more robust complaints handling process and many of the challenges identified in these cases are now either resolved or are in the process of being resolved.
We recently conducted an internal investigation into all cases handled by the Housing Ombudsman with a fresh pair of eyes to review what we would do differently today and test whether the changes we have made go far enough.
We continually review and learn from complaints, and we now run regular sessions to share detailed learnings from all complaints with colleagues to help to avoid cases like this in the future.
We welcome the opportunity to share with the Housing Ombudsman the progress we have made to address the issues highlighted in these cases and the wider progress we have made since our merger.
We also look forward to sharing further actions we are taking to drive improvements to our services and our approach to complaint handling as part of our long-term strategy.
We will work closely with the Housing Ombudsman during its investigation, and we are committed to taking any further learnings forward.
Ruth Cooke in response to the systemic failures in addressing tenants' concerns.
The Rt Hon Michael Gove MP, a veteran member of parliament since 2005, as such is presumably well-versed in the intricacies of failures, corruption, and political manoeuvring, was evidently taken aback and dismayed by the situation, prompting him to correspond with Ms. Cooke.
So….
In hindsight, it becomes painfully clear that the merger between GreenSquare and Accord was not the visionary solution it was touted to be. Instead, it appears to have been a rushed endeavor, driven more by a desire for power and expansion than genuine concern for the well-being of residents. The promises of enhanced services and community benefits have proven hollow, overshadowed by a litany of failures and shortcomings. Ultimately, it's evident that this merger has failed to deliver on its grandiose promises and has instead left the residents of both GreenSquare and Accord worse off than before.