Problem board members can be ejected under new NHF rules

The National Housing Federation received approval for its new model rules from the Financial Services Authority last month.

These enable associations registering as industrial and provident societies to remove board members at the behest of the board alone – as long as they have signed up to the new rules.

Currently they can only be removed if shareholders vote for it, which can be impractical.

Stephen Bull, head of membership and governance at the NHF, said:

“[A vote by shareholders] can involve an awful lot of people, some of whom won’t have been involved for long. It can be quite difficult.”

Provident societies that have signed up to the rules will also find it easier to accept applications for paid board members.

Although new applications to pay board members will still be scrutinised by the FSA, Bull said the process would be “lighter touch” because the association had signed up to the new model.

Board sizes are to be cut from a maximum of 15 to 12 under the new rules. Bull said: “We feel an optimum board size is seven to 12. Anything more can be cumbersome.”

Associations applying to the FSA to become provident societies using the new governance rules will also receive much lighter scrutiny.