Why we are engaging with Blackwood Homes and Care (Blackwood)
We are engaging with Blackwood about its governance, financial management, and the transfer of engagements from Abbeyfield Scotland.
We began engaging with Blackwood in July 2023 when it told us that it was carrying out a strategic financial review. This review highlighted key financial risks for Blackwood relating to its financial planning and performance, including that it was at risk of breaching its loan covenants. Blackwood told us that it was facing immediate financial risks, which it was working to address, and that it would have to withdraw from its planned new build development programme due to being unable to access lending. Blackwood also told us that it was taking action to ensure its longer-term financial health. This led us to put Blackwood’s regulatory status to under review and we asked Blackwood to provide us with information that would allow us to make an assessment of their compliance with the Regulatory Standards of Governance and Financial Management (the Standards), as well as to provide us with assurance that it had plans to address the immediate financial risks. Blackwood also told us that it was carrying out a strategic options review to help develop its plans for the future, and we asked it to confirm the outcome of this review.
Blackwood has provided us with assurance that it has taken action to address the immediate financial risks. However, our review found that Blackwood has weaknesses in its approach to business planning, and Blackwood’s own assurance processes failed to identify this. Blackwood has also been slow to identify financial risks and has made errors in its financial assumptions. This has increased the financial risks for Blackwood, and it has been required to dispose of a number of properties under development to address the material financial shortfall caused by these errors.
Blackwood is still working through the recommendations of the strategic financial review, which requires it to implement a significant programme of savings and remodel how it delivers some if it services.
Our review also highlighted weaknesses in the quality of information that the governing body receives, including that relating to business planning, financial planning and changes to services received by some of Blackwood’s tenants.
Our review of Blackwood’s compliance with the Standards is now complete and our assessment is that Blackwood does not comply, or has only partial compliance with the Standards, specifically Standards one, three and four. This is due to material weaknesses in Blackwood’s approach to business planning, financial management and governance.
Blackwood has told us that it is still to carry out a strategic options review but that this will be completed to allow it to consider its future strategy.
Blackwood is working openly and constructively with us to address these issues.
Following a successful ballot of its tenants, Abbeyfield Scotland transferred its engagements to Blackwood on 31 August 2022 and was removed from the Register of Social Landlords on 28 January 2023. Since then, we have monitored the progress of the integration of Abbeyfield Scotland into Blackwood and the delivery of the commitments Blackwood has made to Abbeyfield Scotland’s tenants. We continue to monitor this.
Our current assessment is that Blackwood in non-compliant and is working towards compliance with the Regulatory Standards of Governance and Financial Management. We set out below the information that Blackwood must provide in order to assure us that it can achieve compliance.
What Blackwood must do:
Blackwood must:
- put in place a comprehensive business plan that clearly sets out its strategic objectives and risk management plans;
- carry out an independent review to assess its compliance with the Standards;
- implement the recommendations of the strategic financial review and provide us with quarterly updates on progress with this and the savings generated;
- send us management accounts quarterly;
- send us a monthly update of its cashflow projections for the coming financial year; and
- send us any additional financial information as required.
Blackwood must also:
- provide regular updates as it develops plans for its future, and confirm the outcome of the strategic options review; and
- send us quarterly updates on progress with the delivery of the commitments it made to former Abbeyfield tenants.
What we will do:
We will:
- review Blackwood’s progress in developing and finalising a business plan and engage as necessary;
- review Blackwood’s progress with carrying out an independent review of compliance with the Standards and engage as necessary;
- review Blackwood’s progress with the implementation of the recommendations from the strategic financial review, including plans to deliver savings to its business and engage as necessary;
- review the financial information that Blackwood provides and engage as necessary;
- review the information that Blackwood provides in relation to its plans for the future of the organisation and engage as necessary; and
- review the updates on the delivery of the commitments Blackwood made to former Abbeyfield Scotland tenants and engage as necessary.
Regulatory returns
Blackwood must provide us with the following annual regulatory returns and alert us to notifiable events as appropriate:
- Annual Assurance Statement;
- audited financial statements and external auditor’s management letter;
- loan portfolio return;
- five year financial projections; and
- Annual Return on the Charter.
It should also notify us of any material changes to its Annual Assurance Statement, and any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns.