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Notting Hill Genesis (NHG) (202212007)

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REPORT

COMPLAINT 202212007

Notting Hill Genesis

6 June 2023

 

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. This complaint is about:
    1. The landlord’s handling of the service charge account which resulted in an overcharge.
    2. The landlord’s handling of the associated formal complaint.

Background

  1. The resident is an assured tenant of the property, a one-bedroom flat, which commenced on 19 February 2018. The landlord is a housing association.
  2. On 22 February 2022, the landlord notified the resident about the total weekly rent it intended to charge for 2020-2021. This included an amount to recover a deficit on the resident’s service charge account owed from the previous year balance in 2019-2020. The resident sought further information about the deficit amount in the service charge statement because other residents had disclosed that a lower amount was itemised on the previous year balance applied to their service charge account.
  3. The landlord issued a correction notice on 23 February 2022, which advised residents affected that an error in the balance brought forward from 2019-2020 had incorrectly generated a deficit amount and that there was no balance to be brought forward. This resulted in a reduction in the amount specified in the resident’s service charge account for 2020 – 2021. However, the landlord’s service charge and rents department did not directly respond to the resident’s query about the previous year balance from 2019-2020 and so the resident raised a formal complaint on 26 April 2022.
  4. In his complaint of 26 April 2022, the resident complaint referenced interactions with the service charge and rents department between February – April 2022, and asked the landlord to explain what generated the previous year balance amount in the annual statement. He also asked why the previous year balance for 2019-2020 was for a higher amount than that sought from other residents in the same block. He did not consider the landlord’s initial responses to be satisfactory. The resident was also concerned with how the landlord characterised the error in its correspondence with all residents on 23 February 2023. He expressed a concern that the incorrect amount stated in the 2020-2021 notice might have been deliberately applied by the landlord’s staff.
  5. The landlord acknowledged in its complaint responses, of 25 May 2022 and 21 July 2022, that an error was made in calculating the previous year balance and that the oversight could not be attributed to an individual. In addition to apologising to the resident for the error, the landlord advised the resident that the error was replicated in other accounts, meaning that an incorrect amount was applied to the service charge account of other residents in the block. It explained that forthcoming changes in its finance systems and processes would hopefully minimise the likelihood of such errors occurring in the future.

Assessment and findings

  1. The terms of the tenancy agreement include a commitment that the landlord will normally review service changes not more than twice a year and that the review will be based on the expenditure incurred and the income receivable during the previous period. The agreement requires the landlord to ensure that any surplus or deficit from this review is considered when assessing the service charge for the following period.
  2. The evidence indicates that the landlord’s communal electric meter in the block where the resident resides was changed during 2019, and the resident queried with the landlord the amount applied to the service charge account for charges relating to electricity in 2019-2020. While reviewing this query the landlord identified an accounting error in how the charges were calculated and the amount applied to the resident’s service charge account was reduced to reflect the correct amount.
  3. In the current case, the resident raised a query regarding the previous year balance shortly after the landlord issued the service charge statement on 22 February 2022. This letter was followed by a correction notice the following day which advised residents in the block that a balance should have been brought forward from the costs incurred in 2019-2020. As a result, there was a reduction in the final amount specified in the service charge accounts for 2020-2021. The resident received this letter.
  4. The landlord’s handling of the service charge account had resulted in an overcharge in the annual statement to the year ending 31 March 2021. As this was not the first time the landlord has identified and corrected an error in the amounts charged to the service charge, the resident was concerned that the manual calculation of costs may continue to give rise to human error, with residents charged incorrectly.
  5. The resident raised a complaint in April 2022, stating that he had been assured that an the landlord’s service charge and rents department would respond to his questions about how the previous year balance was calculated. This had not happened and he felt that the landlord did not take its tenants concerns seriously.
  6. There is no evidence to suggest that the landlord managed the resident’s service charge account inappropriately. The information reviewed by the Ombudsman shows that the landlord investigated the query which the resident raised about the previous year balance for 2019-2020. It identified the error and issuing a notice of correction to all affected residents within 24 hours on 23 February 2022. The incorrect charge was removed from the account in a timely manner and the resident did not incur any additional costs because of this error.
  7. In acknowledging the error, the landlord explained that it was an oversight which could not be attributed to an individual. It apologised to the resident and noted that forthcoming changes to the systems and processes it intended to use would aim to reduce the likelihood of such errors occurring in 2022-2023. The landlord further clarified that, while it had begun to use a new finance system, it was still in a transition period so some of the functions remained manual.
  8. The resident’s letter which requested the escalation of the complaint expressed concern that the landlord characterised the accounting error as an issue affecting a larger number of residents in its letter to all residents in the block when that was not the case. He also noted that the proposed total amount overcharged for both 2020-2021 and 2019-2020 was identical and expressed a concern that the incorrect amount specified in the 2020-2021 notice might have been deliberately applied by the landlord’s staff.
  9. Although it would have been preferable for the error to have not occurred in the first place, it was rectified at the earliest opportunity, and the explanation provided to residents in the correction notice issued on 23 February 2022 was clear and appropriately recognised that the query which led to the identification of the error was raised by a resident. This Service is unable to determine issues about inappropriate accounting practices and would suggest that the resident may wish to seek legal advice about his options if he suspects that the issue was due to financial impropriety by the landlord.
  10. The Ombudsman agrees with the landlord that it was not appropriate for it to circulate information which could disclose the identity of the resident whose query resulted in the error being discovered. The evidence available does not point to any concerns with the landlord’s handling of the resident’s service charge account. Overall, the landlord provided reasonable explanations on the situation and demonstrated its willingness to put things right.
  11. There are however some shortcomings in the landlord’s handling of the resident’s complaint.

Landlord’s handling of the resident’s complaint

  1. The landlord’s complaints procedure provides that it will issue a formal response at stage one within ten working days. The landlord expects to issue the final written outcome in cases that progress to stage two of its complaints process within twenty working days. When it is not possible to adhere to the timescales specified in its published complaints procedure, there is a commitment to agreeing extended timescales with those raising the complaint.
  2. The resident raised a formal complaint on 26 April 2022 and the landlord formally responded to this complaint on 25 May 2022. This was double the ten working days specified for stage one complaints in its complaints policy. The resident escalated the complaint to stage two on 26 May 2022, and the landlord issued its response on 21 July 2022. This also was outside the 20 working days specified for concluding stage two complaints.
  3. Although not referenced by the resident in correspondence with the Ombudsman, the information shows that the landlord did not investigate the complaint in accordance with the timelines specified for both stages in its published complaints policy. It also did not agree a revised timeframe for concluding its investigation until after the ordinary timeframe had elapsed. This is not good practice and not in accordance with the requirements of the Ombudsman’s Complaints Handling Code.
  4. The Ombudsman finds that these shortcomings amount to a service failure  with respect to the landlord’s formal complaint process. In addition to apologising for the delays to providing a decision, it should have offered compensation to the resident for its shortcoming in this regard.

Determination

  1. In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme, there was reasonable redress in the landlord’s handling of the resident’s concerns regarding the service charges applied to the account, which resolved the complaint satisfactorily.
  2. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s handling of the resident’s complaint.

Orders and recommendations

Orders

  1. Within four weeks of the date of this report, the landlord should provide evidence of compliance with the following order to the Ombudsman:
    1. Pay the resident the total sum of £50 in compensation for the delays to providing decisions on the complaint.

Recommendations

  1. The Ombudsman has recently made a number of orders and recommendations in other investigations to this landlord about reviewing its complaint handling approach. The Ombudsman has therefore not made further recommendations around these aspects of service in this report, but expects the landlord to take all relevant learning points from this case into account in its overall reviews of complaint handling.