Clarion Housing Association Limited (202210131)

REPORT

COMPLAINT 202210131

Clarion Housing Association Limited

29 February 2024

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

1. The resident complained about the landlord’s handling of:
   1. her reports that it had not provided a FENSA certificate.
   2. the administration and communication about her service charge account.
2. We have also considered the landlord’s complaint handling.

Background

3. The resident was a shared owner of a flat until February 2022. The landlord was the freeholder.
4. On 27 September 2021 it sent the resident a letter attaching a certificate of service charge expenditure for 2020 to 2021. This outlined a service charge credit of £1,901.39, which it said would be applied to the resident’s account.
5. At the end of September and early October 2021 in internal emails, the landlord noted an error had been made on the service charge certificate. It said:
   1. an estimated major works charge of £1,998.01 was shown, but this had not been paid by residents.
   2. this was leading to an incorrect surplus showing on the account.
   3. the error needed to be rectified urgently.
   4. revised letters needed to be sent to the affected properties.
6. In February 2022 the resident wrote to the landlord. She said she was in the process of selling the property and had been told her account was in arrears. She said she had previously been told she had overpaid her service charge by £1,901.39, and her rent and service charge had been reduced as a result.
7. The resident complained to the landlord on 23 February 2022. She said this landlord had made a “complete mess” of things. She said she wanted the landlord to compensate her for the inconvenience caused.
8. The next day the landlord told the resident of the error in the account letter sent on 27 September 2021. It said:
   1. this showed a major works estimate of £1,998.01 but the resident had not been charged this and it should instead have shown as £0.00.
   2. a “credit variance” of £547.52 was applied which was incorrect as it should have shown a “debit variance” of £1,450.49.
   3. after this was corrected there was a “debit variance” of £96.62 and this had been applied to the resident’s account.
   4. a revised letter should have been sent out, but it could not see this was done – it apologised for this.
   5. the resident’s direct debit was altered based on the incorrect credit and she had underpaid by £380 per month leading to arrears on her account.
9. The landlord provided its stage 1 response on 18 March 2022. It said its service charge team had advised arrears accrued due to a mistake in the resident’s service charge. It said:
   1. while it noted the mistake in October 2021, it did not write to let the resident know of this.
   2. there had been an error in a transfer from the sinking fund which was used to cover the cost of major works.
   3. this had resulted in a large debit appearing on the resident’s account.
   4. it had now corrected the error and the resident’s account was £1,893.30 in credit.
   5. it had awarded the resident £200 in recognition of the issues she had experienced.  
10. The resident requested escalation of her complaint on 20 March 2022. She said she had found the communication from the landlord during sale of her property “stressful and obstructive”. She said it had nearly cost her the sale and the compensation offered did not cover the distress and difficulty she experienced. She questioned whether her account was in now in credit as she said it had been closed after the sale of the property completed on 23 February 2022. She asked what the landlord was doing about other residents similarly affected.
11. The landlord provided its stage 2 response on 31 May 2022. It said its certificate of service charge for 2020 to 2021 included an error as it had incorrectly included an estimated major works charge of £1,998.01, but the resident had not been charged for this. It said when this was corrected on 6 October 2021 it meant the resident’s account balance was in debit by £0.02. It said it had identified in its stage 1 response that the resident had not been informed of these changes and her direct debit had not been updated. It said it had therefore reverted costs back to the original notice of 27 September 2021 so a credit of £1,901.39 had been reapplied. It said the resident’s account was in credit by £228.24 and it would contact her to process this refund.
12. The landlord also said:
    1. it noted the resident’s comments about its communication and would learn from the resident’s case and ensure more focus on joint working.
    2. it would review other accounts similarly affected by the issue and send necessary communication.
    3. it was satisfied the compensation it had offered the resident was fair and adequate, but it had awarded a further £50 in recognition of the delayed stage 2 response.
13. The landlord provided us with an account statement for the resident’s account up to 26 January 2024. This showed it did not apply the credit of £1,901.39 to the resident’s account until January 2024. After this was applied, the statement showed a credit on the account of £1,998.01.
14. On 1 February 2024 the landlord contacted the resident. It said, although it said during its complaint responses that it would reapply the credit of £1,901.39, on review of the case it noted it had not done. It said this was due to the completion of the sale of the property on 23 February 2022. It said it would now arrange to refund this directly to the resident. In response the resident said the landlord’s repeated change in position had caused distress and financial hardship. In replying to the resident, the landlord agreed to pay her a further £600 in addition to £1,901.39.

Assessment and findings

Jurisdiction

The landlord’s handling of her reports that it had not provided a FENSA certificate 

15. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is set out in the Housing Ombudsman Scheme (the Scheme). When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint, or part of a complaint, will not be investigated. The resident complained about the landlord’s handling of her reports that it had not provided FENSA certificate.  While we can see that the resident corresponded with the landlord in January 2022 about it providing a FENSA certificate, we have seen no evidence this matter has been raised with the landlord as a formal complaint.
16. Paragraph 42(a) of the Scheme says that the Ombudsman may not consider complaints which, in the Ombudsman’s opinion are made prior to having exhausted the landlord’s complaints procedure, unless there is evidence of a complaint-handling failure, or the landlord has not acted within a reasonable timescale. Therefore, after careful consideration, this complaint falls outside the Ombudsman’s jurisdiction as it has been made prior to exhausting the landlord’s complaints procedure. It is open to the resident to raise this complaint with the landlord and, should she remain dissatisfied with its response, she could refer it to us for formal consideration.

The landlord’s administration and communication about her service charge account

17. The landlord identified soon after sending out letters about the service charge in September 2021 that this contained an error. But it did not notify the resident of this until February 2022. It is unclear why the landlord did not send out letters to those affected after identifying the issue at the end of September 2021. However, that is did not do so was a failing.
18. It was clearly important to correct the mistake after wrongly telling the resident of a large credit on her account. Instead, the resident was left believing she was owed money by the landlord and reduced her rent and service charge payments accordingly. It was not until she was at the point of selling the property that the landlord told the resident that the account was in fact in arrears. The resident said she found communication from the landlord during sale of her property “stressful and obstructive”. It is acknowledged discovering the issues with her account at the point she was about the sell the property would have added to the stress and worry at this time.
19. The resident said she could not understand the technical language the landlord used in its letters and correspondence. We consider that the landlord could looked to how it could explain the error to the resident in clearer, less technical language. For instance, when it wrote to her on 24 February 2022, it spoke of credit and debit variances. While it is acknowledged that “variance” is term used on the certificate of the service charges, it would have been reasonable for the landlord to at least explain what it meant by this or alternatively look to how it could simplify its explanation to the resident.
20. The landlord’s complaint policy set out that it should provide a stage 1 response within 10 working days and a stage 2 response within 20 working days. But each of its responses to the resident were provided outside these timescales. It appropriately acknowledged and apologised for this delay during its stage 2 response, awarding the resident £50. But it failed to acknowledge that its stage 1 response was several days late. It should have done so and apologise to the resident. In line with the Ombudsman’s Complaint Handling Code (the Code), it would also have been appropriate for it to agree extensions to complaint responses in advance.
21. In responding to the resident’s stage 1 complaint, instead of clarifying the situation, the landlord’s explanation added further confusion. At this time, it said there had been an error in the transfer from the sinking fund. It is not clear where this information came from, but the outcome was that the landlord provided a lack of clarity about how the issue had arisen. Earlier and subsequent correspondence stated the mistake was made by including the estimated a major works charge of £1,998.01 to the certificate of service charge expenditure, when it should have noted this as £0.00. This had led to the resident being incorrectly told of a credit in September 2021. While the stage 2 complaint response sought to explain the situation more clearly, it did not identify or acknowledge that the earlier explanation at stage 1 had been unclear/misleading.
22. In its complaint responses the landlord set out that it would reinstate the credit of £1,901.39 to the resident’s account and pay £200 to the resident in recognition of the issues she had experienced. We consider this would have provided appropriate redress to the resident at this time, had appropriate steps been taken to action it. However, the landlord failed to ensure the credit of £1,901.39 to the resident’s account was correctly processed, and it did not do so until January 2024. This meant the £228.24 credit advised the resident of during its stage 2 response did not appropriately include this sum.
23. The landlord did not do what it said it would until January 2024, more than 18 months after its stage 2 response. That was a complaint handling failing. The landlord has since agreed to pay the resident a further £600 to recognise the impact of this delay. With consideration to the Ombudsman’s remedies guidance and the circumstances of this case, we consider the total award of £850 together with the application of £1,901.39 credit to the resident’s account appropriately recognises the impact of the failings in its administration and communication about the resident’s service charge account and the subsequent complaint.
24. It is noted however, that there is some difference in the credit it said it would pay the resident in February 2024 and the credit shown on the account statement of 26 January 2024. It is unclear why there is this discrepancy. The landlord appropriately acknowledged prior failings in its complaint handling, and offered a proportionate amount of redress. However, there continues to be a lack of clarity in the landlord’s handling of the matter. Given that it has had several opportunities to provide the resident with a clear explanation but has failed to do so, we have found maladministration in the landlord’s handling overall. In light of this, and the earlier failings in the landlord’s explanation of how issues the resident’s service charge account occurred, an order has been made that the landlord write to the resident to explain in clear language:
    1. how the service charge issues between September 2021 and February 2022 occurred.
    2. what the balance of her account was after it has applied the £1901.39 credit in January 2024.
    3. if there was any discrepancy between the account balance in January 2024 and the amount to be refunded to her, the landlord should explain this.
25. The resident raised concerns that this issue may not have been resolved for other similarly affected. While the resident’s concerns are understood, under the Scheme we can only consider complaints brought to us by a complainant or their representative. However, it is noted that when responding to the resident’s complaint at stage 2, the landlord stated it would review other accounts similarly affected by the issue and send necessary communication. In line with this, we have recommended that the landlord ensure that it has contacted other residents affected by this issue, as it had earlier agreed to do.

Determination

26. In accordance with paragraph 42(a) the resident’s complaint about the landlord’s handling of her reports that it had not provided a FENSA certificate falls outside of the Ombudsman’s jurisdiction.
27. In accordance with the paragraph 53(b) of the Scheme the landlord has offered a reasonable remedy to the resident in respect of its failings in its administration and communication about her service charge.
28. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in its handling of the resident’s complaint.

Orders and recommendations

Orders

29. Within 4 weeks of the date of this report the landlord should:
    1. write to the resident to apologise for the failings identified in its complaint handling.
    2. write to the resident to explain in clear language:
       1. how the service charge issues between September 2021 and February 2022 occurred.
       2. what the balance of her account was after it has applied the £1901.39 credit in January 2024.
       3. if there was any discrepancy between the account balance in January 2024 and the amount to be refunded to her, the landlord should explain this.
    3. remind staff of the importance of agreeing complaint response extensions with residents and of apologising for delays in providing these responses.

Recommendations

30. Within 4 weeks of the date of this report ensure that it has contacted other residents affected by this issue, as it had earlier agreed to do.