Charity Trustees And Senior Managers: Debate Continues Over Automatic Disqualification Rules

Readers may recall that the Charities (Protection and Social Investment) Act 2016 extends the range of criminal offences that will disqualify a person from serving as a charity trustee. The Act also envisages the disqualification rule applying to senior managers and other staff with “control over money”. This measure was one of a number taken by Parliament to plug various gaps in the Charity Commission’s regulatory armoury, in particular to protect charities from people who have been involved in money laundering, terrorism, bribery, perjury and misconduct in public office.

However, this change has not yet been brought into force: when the legislation was being debated in the House of Lords, it was recognised that there were serious concerns about how this might impact the work of charities working for the rehabilitation of offenders, and also that it might put many charities in breach of the law if they had not yet become aware of the new rules. The government has repeatedly confirmed that charities would be given time to prepare, and that the delayed implementation would enable people affected by the measure to resign or to seek a waiver from the Charity Commission.

Asheem Singh, interim chief executive at the charity leaders body Acevo, noted that many leaders of rehabilitation charities have criminal backgrounds. “Lock them out of being part of the solution and society suffers,” he says.

Mark Day, head of policy and communications at the Prison Reform Trust, says the new rules are “disproportionate and unnecessary” and should be reviewed even at this late stage. “They’re unjust and wrong, and will prevent charities like us recruiting people we believe are best qualified for the job,” said Day.

Another potentially difficult aspect of extending this measure to employees is that, while it can be enforced by holding trustees to account for compliance in relation to the employment of disqualified persons, it could cut across employment rights, resulting in employment disputes.

It has now been confirmed by the Charity Commission that the commencement date (previously expected to be April 2017) is to be put back to September 2017 at the earliest. ‘These changes will have significant impact on some individuals, said the Commission. ‘We have always been clear that charities and affected individuals must have enough time to prepare for these changes properly.’

Charity Commission clarifies its approach to new powers

The Charities (Protection and Social Investment) Act 2016 also grants the Commission powers to issue official warnings and also to disqualify individuals from trusteeship.

In December 2016 the Commission provided clarification on a number of practical aspects of how it intends to use these powers.

The power to issue warnings, which had caused widespread concern in the sector, is the subject of new guidance including:

• a Q & A document addressing some of the practical issues about warnings;
• confirmation that 28 days’ notice will be given, unless there are specific reasons for a different notice period;
• an outline of the issues on which representations can be made to the Commission regarding a proposed warning notice and of the process by which the Commission will assess those representations;
• the Commission’s internal staff guidance

In relation to the disqualification power, the Commission has issued a 16 page statement on the three criteria in the Act that must be met before the power will be used, as well as an outline of how it will determine the period for which an individual should be disqualified. There is also a Q & A document about the process the Commission will follow when making a disqualification order and about what this will mean in practice for a person who has been disqualified.

IBB Solicitors’ specialist Charities Lawyers have over 50 years’ combined experience in delivering practical commercial advice to charities and not for profit organisations and those who work with them. For advice please call us today on 01895 207862 or email charities@ibblaw.co.uk.