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Clarion Housing Association Limited (202215585)

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REPORT

COMPLAINT 202215585

Clarion Housing Association Limited

19 April 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 complaint is about the landlord’s:
    1. handling of concerns about the administration of the resident’s service charge, and reports of overcharges.
    2. complaint handling.

Background

  1. The resident holds a shared ownership lease with the landlord. The property is a flat within a block. The landlord provides or manages the common services of the block or estate. The resident pays for these services through a variable service charge administered by the landlord.
  2. On 19 January 2021 a local councillor, following contact from the resident raised a series of concerns with the landlord about her service charge, particularly about an increase in the communal electricity charge. The landlord provided a full response to these concerns on 23 February 2021. On 22 September 2021 the landlord provided an estimated and actual service charge statement to the resident for 1 April 2020 to 31 March 2021. The actual cost was £550.12 more than the estimated figure, with an increase of £270.79 for the communal electricity and an increase of £117.70 for pest control.
  3. In January 2022 the resident raised a formal complaint with the landlord. In summary, she said that the landlord had not resolved the communal electric charges and questioned why this issue remained unresolved. She queried why she was being charged for a supermarket ‘yards’ electricity and pigeon proofing their car park. In addition, she asked why the landlord had not resolved her complaint by the summer as agreed. As a resolution she wanted the service charge to be corrected and for the landlord to review its processes.
  4. On 16 June 2022 the landlord informed the resident in writing that it had found that 75% of the communal electric meter usage was supplying the wider development and that it would apply a correction and subsequent credit to her service charge account. In addition, it explained that it had incorrectly charged residents for pest control, it had subsequently reduced this charge and would apply a refund to their service charge accounts. On 8 July 2022, the landlord responded to the resident’s complaint at stage 1 of its complaints process. It reiterated the above and in addition it:
    1. acknowledged the numerous calls and emails the resident made to chase these matters and apologised for the lack of ownership.
    2. apologised for the length of time taken for the investigation to be completed and to correct the resident’s service charge account.
    3. apologised for the time taken to respond to her complaint and offered a total of £600 compensation comprised of £550 for its failings in dealing with the service charge dispute and £50 for delays in its complaint response.
  5. On 29 September 2022 the resident escalated her complaint. She was unhappy with the performance of the service charge department as this was not the first time this had happened. She added that she had received a letter today that showed another overspend of £900 which she believed was incorrect. She further explained that the erroneous charges on her account were yet to be fully corrected. On 26 October 2022, the landlord issued another stage 1 response. It repeated its previous stage 1 response and increased its compensation offer to £850, comprised of £750 for its service charge failings and £100 for its delayed complaint response.
  6. On 2 November 2022 this Service, following contact from the resident asked the landlord to respond to the resident’s complaint at stage 2 of its complaints process by 30 November 2022. On 13 December 2022, the landlord issued its stage 2 final response. It reiterated parts of its stage 1 response. In addition, it said:
    1. that due to the cyber incident, it was unable to provide the resident with a breakdown or finalise the actual charges for the year ending 31 March 2022.
    2. the letter the resident had received was not a demand for payment and that when she received the statement of actual charges, she could request a breakdown.
    3. she would not receive a lump sum payment for the pest control error and the variance would show up in her account automatically.
    4. the energy supplier investigated the landlord’s electric meters on 19 October 2022, and had requested a copy of their findings.
    5. the delays in looking into the wider estate costs were due to the time taken to get the energy supplier to investigate the faulty meters.
    6. it apologised for providing two stage 1 responses and for the delay in escalating the complaint and awarded a further £200 compensation for the inconvenience caused.
  7. The resident asked this Service to investigate the complaint on 21 March 2023. She felt that the landlord was not taking her concerns seriously and that it would only reduce and refund overpayments when residents raised issues or made complaints. She added that the landlord had not reduced the pest control charge as had been agreed. Further, she was concerned that the communal electrics for 2022/23 were incorrect. As an outcome she wanted the landlord to stop overcharging residents, lessons to be learned from past errors and actions to be taken to resolve the issues raised. She also wanted the landlord to refund the pest control charge.

Assessment and findings

Scope of investigation

  1. The Housing Ombudsman will not investigate complaints about the level of a service charge. Paragraph 42d of the Housing Ombudsman Scheme says: ‘The Ombudsman may not investigate complaints which, in the Ombudsman’s opinion, concern the level of rent or service charge or the amount of the rent or service charge increase.’
  2. However, the Ombudsman will consider complaints in the context of a member landlord’s management of service charge accounts and handling of enquiries relating to service charges. Concerns about the level of service charges may be more appropriately dealt with by the First Tier Tribunal for arbitration of the reasonableness or level of the charges. Therefore, this investigation is not about the level of the service charge billed by the landlord. It is about whether the landlord dealt with the resident’s concerns and whether it responded to her reports of overcharges appropriately.

The landlord’s handling of concerns about the administration of the resident’s service charge, and reports of overcharges

  1. When investigating a complaint, the Ombudsman applies its Dispute Resolution Principles. This is high-level good practice guidance developed from the Ombudsman’s experience of resolving disputes, for use by everyone involved in the complaints process. There are three principles driving effective dispute resolution:

        a. Be fair – treat people fairly and follow fair processes.

        b. Put things right.

        c. Learn from outcomes. 

  1. The Ombudsman must first consider whether a failing on the part of the landlord occurred, and if so, whether this led to any adverse effect or detriment to the resident. If it is found that a failing did lead to an adverse effect, the investigation will then consider whether the landlord has taken enough action to ‘put things right’ and ‘learn from outcomes’.
  2. Under the terms of the lease, the landlord is to provide services for which leaseholders are obliged to pay by way of a variable service charge. In this case, it is not disputed that the resident was overcharged for electric and pest control services. When a resident raises a concern with a landlord, the Ombudsman expects the landlord to consider this, investigate the issue, and provide a timely response, setting out its position clearly.

Communal electricity

  1. On 23 February 2021 in response to a series of queries about the resident’s service charge the landlord advised that it had identified that the electric meters where the resident lived were supplying electricity to areas outside of the building. Subsequently, it had arranged for ‘check meters’ to be installed so it could monitor the consumption. It added that if an overcharge was found it would refund the resident for the period they had been in occupation. It explained that this exercise would not take place until late summer which would enable it to calculate ‘actual’ costs for the current financial year ending 31 March 2021.
  2. However, it is unclear if the landlord completed this exercise as it agreed it would and it appears that the landlord failed to keep the resident updated on any progress in respect of this issue. Indeed, the service charge statement on 22 September 2021 showed a large increase in communal electricity which the landlord confirmed on 16 June 2022 was likely due to the same issue as described above. This would have caused distress and inconvenience to the resident who would have likely felt that the landlord had failed to investigate these issues and that her concerns were being ignored.
  3. In addition, following the resident’s January 2022 complaint, she chased the landlord on at least 3 occasions for an update. Yet the landlord failed to provide a meaningful response for over 4 months. This was a significant failure in communication on the landlord’s part that would have caused further distress and inconvenience to the resident.
  4. Nonetheless, its June 2022 response was detailed, and it clearly explained its position. It stated that the results from its ‘submeters’ found that approximately 75% of the communal meter usage was supplying the ‘wider’ development and informed the resident that a 75% reduction would be applied to her service account for the years 2019/2020 and 2020/2021. It added that once the energy supplier had completed their investigations into the potentially faulty meters it would be able to better understand the electricity usage. It added it would not charge residents for the wider development costs until it had a firm position on the energy consumption. This was a satisfactory approach for the landlord to take.
  5. However, it is unclear if the landlord reached a firm position on this. As part of the resident’s September 2022 escalation request, she raised concerns that there had been another overspend on the electric charges for 2021/2022 and that she was unable to assess this as the landlord had not provided a breakdown of the charges due to its cyber incident. While this Service cannot determine whether this charge was accurate or not, the landlord should have provided the resident with an outcome or an update on its investigations before providing her with its service charge statement. Its failure to do so would have likely left the resident feeling that the situation remained unresolved.
  6. The landlord’s final response suggested that the energy supplier attended ‘the site’ on 19 October 2022 and found that the ratios in both meters were not as expected. It stated that it had requested a copy of the engineer’s ‘final agreed findings’. However, it is unclear if did so or whether these findings were provided to the resident. An order has been made below in respect of this.
  7. The landlord’s final response explained that the delay in the wider costs being assessed was due to the time taken to get the energy supplier to investigate the potential faulty meters. While this may have been the case, there is no evidence that the landlord informed the resident of this or that it kept her updated on its progress throughout the complaint. This was a further failure in communication on the part of the landlord that would have likely left the resident feeling like the onus was on her to progress matters. In addition, the landlord has not provided this Service with any evidence of communication between the landlord and the energy supplier to reconcile its claims. This likely indicates issues with the landlord’s record keeping and a recommendation is made below.

Pest control

  1. In the resident’s formal January 2022 complaint, she queried why she was being charged for pigeon proofing the supermarket car park. The landlord failed to respond to this issue until its July 2022 stage 1 response, over 5 months later. This was another considerable delay. Furthermore, its response stated that the pest control charges were incorrect and informed the resident that the amount had been reduced from £117.19 to £11.10 and that this variance would show up on the resident’s service charge account automatically.
  2. While the landlord has provided this Service with evidence that showed the variation in this charge, it is unclear if this has been shared with the resident. This Service notes that the resident disputed receiving any reduction to pest control charges. Therefore, a recommendation is made below.

Conclusion

  1. Overall, the landlord’s communication with the resident was poor and its approach was often reactive with it relying on the resident to contact it before responding or providing updates. In addition, its investigations took too long, and it failed to correct the resident’s service charge account within a reasonable timescale. While the landlord apologised for these failures, identified learning and awarded a total of £750 compensation, it is unclear if it fully completed its investigations concerning the issues with the communal electricity. Further, it is also unclear whether it obtained the final findings from the energy supplier and if it provided the breakdown of the wider estate costs to the resident as agreed in its final response. This is concerning as it may lead to future overcharges. This amounts to service failure on the part of the landlord and orders have been made below for remedy.
  2. It is noted that the resident stated that there were further errors in the service charge actuals for 2021/2022 and that she had concerns that the figures for 2022/2023 were also incorrect. While this issue was raised after the landlord’s final response and therefore does not form part of this investigation, a recommendation has been made below.

Complaint handling

  1. The landlord’s complaints policy states that it will aim to respond to complaints within 10 working days at stage 1. From June 2022 the landlord implemented an interim complaints policy due to a cyber incident. This policy stated that it would respond at stage 2 within 40 working days. It took the landlord almost 6 months to respond to the resident’s complaint at stage 1 which led to the resident chasing it on multiple occasions. This was a considerable delay that would have caused distress and inconvenience to the resident.
  2. In addition, when the resident escalated her complaint, the landlord provided a new stage 1 response. This was inappropriate. The landlord should have escalated her complaint and provided a stage 2 response within its policy timescale. Its failure to do so delayed getting matters resolved for the resident. Overall, it failed to escalate the resident’s complaint within a reasonable timescale, and it took the resident almost a year to complete the landlord’s complaints process. The delays were considerable and avoidable.
  3. While the landlord’s approach was contrary to its usual procedure, it acknowledged this, identified learning outcomes, and awarded a total of £300 compensation in recognition of its delayed responses. The landlord’s compensation policy states that it will award compensation of over £250 where it has identified considerable failings. This is broadly in line with the Ombudsman’s remedies guidance, which suggests that compensation over £100 should be considered where there is a failure that has adversely affected the resident. The Ombudsman therefore considers that the landlord’s offer of redress was satisfactory in putting matters right.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of its handling of concerns about the administration of the resident’s service charge, and reports of overcharges.
  2. In accordance with paragraph 53b of the Housing Ombudsman Scheme, the landlord offered redress to the resident prior to investigation which, in the Ombudsman’s opinion, resolves the landlord’s complaint handling.

Orders

  1. The landlord must do the following within the next four weeks:
    1. Provide a written apology to the resident for the failures identified in this report.
    2. Review the communal electric overcharging issues in this case, with reference to the failings identified in this report, to determine what action has been/will be taken to prevent a recurrence of these. The landlord should write to the Ombudsman with the outcome of this review.
    3. The landlord must provide the resident with the energy suppliers ‘final findings’ following its site visit in October 2022. If the landlord does not have this, it should explain why and arrange a further investigation of the meters.
  2. The landlord should provide this Service with evidence of compliance with these orders within the timescale set out above.

Recommendations

  1. The landlord should satisfy itself that the service charge actuals for the years 2021/2022 and 2022/2023 were correct. The landlord should provide a breakdown of these charges to the resident if has not already done so.
  2. The landlord should provide evidence of the pest control variation/reduction to the resident.
  3. The landlord should review the Ombudsman’s Spotlight report of Knowledge and Information Management (available at: KIM-report-v2-100523.pdf (housing-ombudsman.org.uk).