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Changes to the code of governance for public listed companies are being proposed  by Sir Christopher Hoggs of the Financial Reporting Council (FRC), today (1 Dec 2009) which could also apply to housing associations.

Under the TSA co regulation framework  published  in November  housing associations will be free to choose their own code of governance from April 2010 .  As a result the sector will also need to consider whether changes to the Combined Code of Corporate Governance , which is the foundation document for the National Housing Federation ‘s Code of Governance  should be adopted by housing organisations.

Changes to the code follow the recommendations of the Walker Report on the banking sector published earlier this year.  Changes include  all directors (including non executive members) must be subject to external reviews and new roles around pay, skills and duties.  One of the recommendations is that chair and board member performance is reviewed externally.   The other major change is that Chairs of board should be subject to an annual reelection process.  This idea could alarm many in the sector.

The Walker Report asked whether  non-executive directors have sufficient knowledge and understanding of the business that they can contribute to the board, and said that banks should provide dedicated support to non-execs where they need it. Many housing associations already have regular external reviews that focus on the board member skills  and duties required to help  the organisation meet objectives. The TSA’s approach is to allow organisations flexibility in how they raise governance standards.  It will be a  question for each organisation to decide whether external validation could  help bring a valuable independent perspective.

I believe that not for profit companies like housing associations need to review current governance arrangement to meet the TSA’s proposed new co regulatory framework.  Sir Christopher  Hoggs proposals will be a valuable  contribution to the governance debate in the housing sector , especially when it comes to locally decided standards and codes.