Clarion Housing Association Limited (202203929)

REPORT

COMPLAINT 202203929

Clarion Housing Association Limited

15 December 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

The complaint is about the landlord’s handling of the resident’s queries about his service charges.
The Ombudsman has also considered the landlord’s complaint handling.

Background

The resident is a leaseholder in a shared ownership scheme with the landlord, and lives in a 2 bedroom first floor flat, in a block. The landlord is the freeholder of the block, and the resident pays a service charge for various services delivered by the landlord. The landlord does not have any recorded vulnerabilities for the resident.

Summary of events

The landlord sent the resident an ‘actual service charge’ letter for 2020 to 2021 on 22 September 2021. The letter said the actual cost for services provided was £976.93 higher than it had estimated. The letter gave a breakdown of costs, some of which were lower than estimated, but the following services were higher than estimated:
1. Bin hire, which was estimated at £0, but cost £12
2. Caretaking, which was estimated at £0, but cost £594.02
3. Door entry service contract, which was estimated at £0, but cost £120
4. Fire protection, which was estimated at £4.56, but cost £127.79
5. Refuse collection, which was estimated at £13.32, but cost £83.13
6. Administration fee, which was estimated at £43.20, but cost £170.61.
The resident contacted the landlord, on 4 October 2021, to query the amount he had been charged, and said:
1. He should not be charged for bin hire, as all resident’s in the block have their own, local authority issued, bins
2. The property had never had a caretaker
3. He did not believe there was a door entry contract in place, as residents use normal keys to enter the building
4. There was no communal refuse collection, so he did not think this charge applied
5. He asked for clarification on what the management and administration fees were for.
The landlord wrote to the resident on 26 November 2021, and said:
1. The charges for caretaking, bin hire and bulk refuse collection had been “incorrectly applied” to his account, and had now been removed
2. It gave a breakdown of the charges the resident was liable to pay
3. The ‘door entry’ charge was in relation to a series of callouts to fix the intercom system in the block
4. The administration fee was charged at 15% of his overall bill, which was to contribute to the cost of managing the resident’s account.
The landlord wrote to the resident on 24 February 2022 outlining the rent and service charge that would be due from April 2022. The letter said the monthly payment due would be £402.64, made up of £324.71 in rent, and £77.93 in service charges. The letter gave a breakdown of the service charge estimates, which included amounts for bin hire, and refuse collection. The resident contacted the landlord to ask why some of the charges that had been removed before had been added again. From the evidence available, it is unclear when the resident raised this concern.
The landlord wrote to the resident on 22 March 2022 and said it had removed the bin hire charge from his bill. It explained that the refuse collection charge was for the costs in removing “large objects dumped or disposed of around the estate”. It explained the charge was not for the removal of “general waste”.
The resident contacted the landlord on 6 May 2022 to make a complaint, and said that he had been trying to get in touch with the service charge team about queries with his service charge, since September 2021, but it had not responded. The resident raised a concern that he had been charged for services not received, and was unhappy with the landlord’s handling of the matter.
The landlord sent the resident its stage 1 complaint response on 20 July 2022 and said:
1. It apologised the complaint response was delayed and this was due to a cyber security incident it was experiencing
2. When the resident raised his concern about the service charges, it conducted a review and removed the services he was not receiving. It had reduced the amount owed accordingly
3. It apologised for the inconvenience caused by the delay in providing a response to his concerns, and advised he had not been charged for services not received
4. It offered the resident £300 in compensation, made up of:
  1. £250 for its handling of the service charge issue
  2. £50 for the delay in responding to the complaint.
The resident emailed the landlord on 21 July 2022 and said he wanted to take his complaint to stage 2. He said nobody had spoken to him about his complaint, so the landlord was not fully aware of why he had cause to complain. The landlord responded on 4 August 2022 and said it would investigate the complaint at stage 2, but due to the cyber incident, it may not be able to respond within the its normal timescales.
The resident emailed the landlord on 4 August 2022 and said that further to his concerns about its handling of the service charge issue, he had been sent a letter giving a different monthly charge to the letter of 24 February 2022, and asked for clarification.
The landlord sent its stage 2 complaint response on 21 September 2022 and said:
1. It apologised the complaint response was delayed and this was due to the cyber security incident it was experiencing
2. Its stage 1 complaint response gave the correct information, identified failures and offered compensation for those failures. It was of the view its response was “fair” and “accurate”
3. It gave a breakdown of the corrected service charges from September 2021, and March 2022
4. The resident had raised a concern about the differing amounts he had been told he owed, which was not part of his original complaint. But, the landlord had decided to respond to his concerns about this issue, as part of its stage 2 response.
5. It apologised for the confusion caused by being given different rent and service charge figures, and it confirmed the correct amount. It was unable to investigate the reason this had happened, due to the “disruption” with its internal systems.
6. It offered the resident £75 in compensation, made up of:
  1. £25 for the error in the rent and service charge letter
  2. £50 for the delay in responding to the stage 2 complaint.
The resident contacted this Service on 24 October 2022 and asked the Ombudsman to investigate his complaint. He said he was unhappy with the landlord’s final response and the service charge amounts were “never explained”.

Assessment and findings

Relevant obligations, policies and procedures

The resident’s lease agreement states that he is liable to pay the landlord a service charge for providing general maintenance and repairs, buildings insurance, maintaining communal areas.
The landlord’s frequently asked questions (FAQ) document on service charges states that a resident can request a full breakdown of their service charges. It also gives information on different service charges including its administration and management fees.
The landlord’s compensation policy states it has 3 bands for awarding compensation, which are:
1. £50 to £250 for failures resulting in “some impact” on the resident
2. £250 to £500 for “considerable” failures with no permanent impact on the resident
3. Above £700 for failures resulting in “significant and serious long term” impact on the resident.
The landlord’s complaints policy states that it operates a 2 stage complaints procedure and will respond to stage 1 complaints within 10 working days and stage 2 complaints within 20 working days.

Query about service charges

The Ombudsman cannot review complaints about the increase of service charges and determine whether service charges are reasonable or payable. However, we can review complaints that relate to the collection of service charges or how information about service charges was communicated. As such, this investigation has not considered whether the service charges levied to the resident were reasonable. Rather, we have considered whether the landlord’s response to the resident’s query about service charges was fair and reasonable in the circumstances.
On the resident raising his concerns about the service charges, the landlord appropriately investigated, and removed the charges he was not liable for. This was appropriate in the circumstances. That the landlord did not apologise for the error, in its letter of November 2021, or say what it would do to prevent the same issue happening again, was unreasonable. The resident was inconvenienced by the matter, and had to raise a concern with the landlord, its failure to apologise for that inconvenience was unreasonable. It had mistakenly tried to charge the resident a significant amount more than he was due to pay, and evidently recorded him as receiving services he did not. That it did not explain how the error had occurred and what it would do to prevent it happening again was a failure to apply the Ombudsman’s dispute resolution principle of learning from outcomes.
The landlord’s letter, of November 2021, also failed to address a specific query the resident raised about the management fee, which was a shortcoming. It is noted that it did answer his query about the administration fee, but was silent on the management fee. This inconvenienced the resident. The landlord has information about its fees on the FAQ section of its website. It is unclear why the landlord did not seek to signpost the resident to that information, as it would have answered his query.
The lack of learning from its investigation in late 2021 is further evidenced by the service charge letter issued in February 2022. The resident experienced a further inconvenience of needing to raise another query with the landlord, as he had, again, been charged for services had not received. As before, the landlord’s letter of March 2022 lacked any apology for the inconvenience caused to the resident, or what learning the landlord had done to prevent the issue happening again.
The landlord’s stage 1 complaint response, of July 2022, went some way to putting right its earlier failings and apologised for the inconvenience caused to the resident. As with its earlier letters, the complaint response failed to apply the Ombudsman’s dispute resolution principle of learning from outcomes. The response gave no assessment of how the mistakes were made, and what it would do to prevent them happening again. This was inappropriate and a failure to apply the dispute resolution principle of learning from outcomes, and the Ombudsman’s Complaint Handling Code (the Code). Which states that an effective complaints process enables a landlord to learn from the issues that arise for residents, and to take steps to improve the services it provides.
The stage 1 complaint response was silent on the further error made in the letter of February 2022, which was a failing and caused an inconvenience. The lack of consideration of the later issues supports the conclusion that it lacked learning. The lack of any meaningful assessment or learning about its handling of the matter was inappropriate. It is noted that the landlord’s stage 2 complaint response did cover the error from February 2022, which went some way to putting this right.
The landlord’s stage 2 complaint response, of September 2022, found that the stage 1 investigation was “fair” and “accurate”. This was not appropriate, as the stage 2 complaint response failed to acknowledge its original investigation failed to consider all of the errors the landlord had made. That the landlord did not acknowledge this failing and offer further redress was unreasonable.
The landlord’s stage 2 complaint response did, however, address additional concerns raised by the resident as part of his stage 2 escalation request. The landlord appropriately apologised and offered additional redress for the confusion caused by its letters giving differing amounts of charges owed. This was appropriate in the circumstances. The landlord advised that it was unable to show learning about how the error had occurred, due to its ongoing IT issues. This was reasonable in the circumstances, and the landlord’s acknowledgement of it sought to manage the resident’s expectations.
The landlord’s stage 2 complaint response also gave a detailed breakdown of its service charge calculations and how it had come to the final figures the resident was owed. This was appropriate in the circumstances and it sought to abide by the resident’s request to provide further detail on how it had come to the final figures. However, the stage 2 complaint response failed to show any learning about how the previous errors had occurred and what it planned to do to stop them happening again. This was a further failing in its handling of the matter. The inconvenience this caused the resident is evident, as he told this Service that the issues were “never explained” properly. Appropriate learning would have gone some way to alleviate the resident’s concerns that similar issues would happen again.
It is noted that the resident was not out of pocket as a result of the failings by the landlord. But he was inconvenienced by the need to query the landlord’s charges on multiple occasions. The landlord appropriately acknowledged and apologised for its identified failings in its handling of the matter. Its complaint responses lacked learning, and failed to offer redress for the inconvenience caused by its further error in February 2022. Therefore the compensation of £275 it offered for its handling of the service charge issue did not fully put things right for the resident. As such, a series of orders have been made below.

Complaint handling

When the resident first made a complaint, in May 2022, the landlord opened a complaint investigation, which was appropriate. However, this Service has seen no evidence that the landlord formally acknowledged the resident’s complaint. This was a failure to abide by the Code, that states complaints should be formally acknowledged, and the landlord’s understanding of the complaint set out, within 5 working days. This caused an inconvenience to the resident as he was left not knowing when, or if, the landlord would respond to his complaint.
When the landlord issued its stage 1 complaint response, it stated that its response had been delayed, due to the cyber incident it had experienced. It was unreasonable to put the entirety of the delay down to this reason. The resident raised his complaint on 6 May 2022, which meant a response was due by 20 May 2022, according to its procedure. The landlord told this Service it experienced the cyber incident on 17 June 2022, nearly a month after its complaint response was due. To therefore rely on this alone as the reason for the delay lacked transparency and failed to acknowledge other factors that delayed its response.
It is noted that the cyber incident impacted on the landlord’s ability to respond to the resident’s complaint, after it occurred. However, its lack of communication to explain the delays was a further failing in its complaint handling. This Service has seen no evidence that the landlord acknowledged or sought to manage the resident’s expectations about the delays throughout stage 1 and 2.It is noted it said its stage 2 response was likely to be delayed, buts the lack of periodic updates about the delay, was unreasonable. The resident experienced an unfair and protracted complaints process, without the landlord seeking to manage his expectations about the ongoing delays.
It is noted that, on 17 June 2022, the landlord introduced an ‘interim’ complaints policy which increased its response timeframes to 20 working days for stage 1 complaints and 40 working days for stage 2 complaints. However, there is no evidence to indicate that the indicative timeframes were communicated to the resident, at any time, which would have helped manage his expectations. In any event, the landlord responded outside of the timeframes set out in its interim procedure, which was a further failing.
The landlord’s complaint responses were sent well outside of the timeframes set out in its policy and the Code. Some of the delay was caused by the cyber incident it was experiencing. The stage 1 response was however, inappropriate, in this regard. As outlined above, the landlord’s complaint responses failed to show learning it had done. The landlord was not proactive in communicating about delays with the resident, which caused an inconvenience. The £100 it offered for its complaint handling did not fully put things right for the resident.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in the landlord’s handling of the resident’s queries about his service charges.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in the landlord’s complaint handling.

Reasons

The landlord appropriately acknowledged and apologised for its identified failings in its handling of the service charge issue. Its complaint responses lacked learning, and failed to offer redress for the inconvenience caused by its further error in February 2022. The lack of learning and failure to address its later error, mean the compensation it offered did not fully put things right for the resident.
The landlord’s complaint responses were sent well outside of the timeframes set out in its policy and the Code. Some of the delay was caused by the cyber incident it was experiencing. The stage 1 response was however, inappropriate, in this regard. As outlined above, the landlord’s complaint responses failed to show learning it had done. The landlord was not proactive in communicating about delays with the resident.

Orders

Within 4 weeks, the landlord is ordered to:
1. Apologise for the failings identified in this report
2. Pay the resident £875 in compensation, made up of:
  1. The £275 it offered for its handling of the service charges query (if it has not already done so)
  2. A further £200 in recognition of the inconvenience caused by its handling of the service charges query
  3. The £100 it offered for its complaint handling (if it has not already done so)
  4. A further £300 in recognition of the inconvenience, time and trouble caused by its complaint handling.
Within 8 weeks, the landlord is ordered to:
1. Considering the lack of learning shown, and the failings identified in this report, the landlord is ordered conduct a review into its handling of the service charge issue. This is to identify how the errors occurred, and what it can do to prevent such issues arising again
2. The landlord must share the outcome of the review with this Service, also within 8 weeks.
3. Conduct training with its complaint handling staff, with a particular focus on:
  1. Communicating delays to residents to help manage expectations
  2. Showing appropriate learning when a complaint investigation identifies failings
  3. The complaint handling principles outlined in the Code
  4. The content and dates of the training should be shared with this Service, also within 8 weeks.