Monitor is consulting on lowering the threshold at which investigations into foundation trusts’ finances can be triggered.

In a consultation document published last month, the regulator said that by intervening earlier it might be able to stave off more serious problems at trusts that could be struggling.

The regulator currently assigns all foundation trusts a single financial risk rating based on their liquidity and capital servicing capacity.

The risk rating is equally weighted between the two factors, meaning that if a provider has a strong rating on one measure it could “mask” a serious risk in the other.

Monitor proposes to lower the threshold for triggering intervention by changing the rules so it can investigate in the cases of trusts where one measure on its own represents a significant risk.  

However, it states in the document that the new triggers would “highlight a concern we may wish to investigate”, without meaning Monitor would “automatically investigate or take regulatory action”.

Monitor is mulling the idea at a time of increasing financial strain in the provider sector.

The document notes there is “significant financial pressure on foundation trusts and… an increasing number of providers” at a higher risk of ceasing to be a going concern.

It continued: “At times, it may be appropriate for Monitor to investigate a potential issue earlier, especially where earlier intervention could prevent further deterioration or help resolve issues more easily.”

As well as consulting on changes to the way it manages financial risk, the regulator is also looking at turning the new access measures due to be introduced for mental health trusts into “proxies” to monitor their governance.

The consultation closes on 18 February with any changes due to take effect from April.