The role of the primary Registrar is not to approve affiliated entity arrangements. The primary Registrar will use information about affiliated entity arrangements to assess the impact, if any, on the provider’s tier of registration, and on its assessment of whether the provider is complying with its obligations under the National Law, or is likely to comply with those obligations.
The extent of a provider’s affiliated entity arrangements, and the nature of those arrangements may have an impact on the way the primary Registrar regulates that provider.
Registrars will consider affiliated entity arrangements when determining the appropriate tier of registration.
Relevant factors include:
Affiliated entity arrangements are likely to affect the Registrar’s determination of the risk inherent in the community housing provider’s operations. The risk profile of a provider will affect the level of regulatory engagement required, and the nature of that engagement. Community housing providers must have adequate systems, policies and procedures in place to manage, monitor and control all forms of risk arising from their association with affiliated entities (including with respect to reputational risk, corporate entity risk, governance risk and financial risk).
There are a number of matters that the primary Registrar will examine when assessing providers in group structure arrangements, including:
Community housing providers should be financially viable on a stand-alone basis, even if another member of the group is also a registered community housing provider.
A registered community housing provider must carry out its obligations under the National Law and must have structures in place to manage any conflicts of interest between those obligations and the interests of any group member.
Community housing providers should be aware of particular risks arising from agreements entered into with associated entities which are members of the provider’s group.
Risks arising from those relationships should be addressed by the provider at least as strictly as it would address exposures to unrelated parties. It is also prudent to set limits on exposures to related entities at both an individual and an aggregate level.
The types of issues that a primary Registrar will examine include:
Primary Registrars expect parent community housing providers to exercise high-level control, by monitoring the activities and performance of their subsidiaries. They also expect parent
community housing providers to take timely and effective action if their subsidiaries do not operate within approved limits or fail to meet agreed standards of performance.
The balance between strategic control by the parent and operational independence for subsidiaries is for the group members to decide. Community housing providers should be able to demonstrate that the balance reflects the group’s objectives, the legal status of its members and the risks involved. For example, a community housing provider whose subsidiaries deliver core landlord services to tenants would typically exercise a higher level of control over its subsidiaries. However, a subsidiary set up to deliver entirely commercial activities might operate on more of an arm’s length basis, to minimise risk to the parent.
Primary Registrars expect community housing providers to take suitable professional advice to inform their decisions about the appropriate level of strategic control/operational independence and how to achieve this. Community housing providers should identify any risks arising from the arrangements they put in place.
Primary Registrars also expect community housing providers that are parent entities to establish clear financial and other limits within which the provider’s subsidiaries should work. Examples of ways this could be managed include:
It is important for community housing providers to ensure operations are subject to sound governance and decision-making processes. The Evidence Guidelines set out a list of governance issues which must be appropriately addressed in relation to arrangements with entities which are related to the provider.
Providers must also:
Registered community housing providers which enter into outsourcing arrangements (whether with a group entity or with another entity) should be aware that:
07 Jul 2022
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.