The Royal British Legion breached the Code of Fundraising Practice by failing to adequately monitor the activities of the sales promotion company Magnum Direct, the Fundraising Standards Board found in one of its final investigation reports.
Magnum Direct, whose door-to-door fundraisers were employed by the RBL to sign householders to direct debits for the charity’s Poppy Lottery, also breached the code during fundraising approaches and training sessions, the FRSB said.
The regulator launched an investigation in August 2015 after The Mail on Sunday reported that a paid fundraiser at Magnum Direct was claiming to be an unpaid volunteer while working on behalf of the RBL. The newspaper also alleged that donors were potentially being misled about the use of their money and that fundraisers were being told to ignore "no-cold-caller" notices.
The FRSB said that Magnum Direct’s code breaches included failing to use solicitation statements, providing misleading information about how a donor’s funds would be used and advocating putting pressure on the public to give.
The FRSB, which is currently finishing its last investigation after handing its caseload over to the Fundraising Regulator last month, said it had received transcripts of audio recordings and video footage from The Mail on Sunday, which proved that Magnum Direct trainers had encouraged a trainee fundraiser to falsely claim they were a volunteer.
The trainers also failed to train staff to deliver solicitation statements – a legal requirement of all paid fundraisers. The regulator said it was concerned that the contractual agreement between RBL and Magnum Direct did not make any reference to the legal requirement for sales agents to deliver such statements.
The FRSB found that Magnum Direct fundraiser breached the code by telling prospective donors they were raising £3.5m for a rehabilitation centre for injured troops when the money was actually destined for the charity’s general funds.
It also found that Magnum sales agents were trained to knock on doors displaying no-cold-calling stickers, despite the IoF confirming in June 2015 that the code would prohibit such approaches from September of that year.
The charity terminated its partnership with Magnum Direct within weeks of The Mail on Sunday’s story appearing, and in October it stopped working on its only remaining door-to-door campaign with another agency partner, AGS Global Fundraising Services.
A spokesman for the RBL said in a statement: "Following an urgent Legion investigation into allegations in August 2015 that identified poor working practice, we moved quickly to terminate our relationship with Magnum Direct. The legion no longer engages in any doorstep fundraising activity.
"Our practices are under constant review to ensure we are working to the highest of standards and we welcome the FRSB’s report as a further opportunity for review."
A statement issued by Magnum Direct said: "Magnum Direct Limited has always viewed this regrettable incident in July 2015 as presenting an opportunity for us to improve our quality assurance programme and to become a better supplier to the charity sector. Magnum has worked in this sector for nine years and assisted both big and small charities to increase their fundraising income. We are proud of what we have accomplished."
Stephen Dunmore, chief executive of the Fundraising Regulator, said: "This investigation by the FRSB has again shown how essential it is for charities to monitor the arrangements they make with fundraising agencies very closely. If they do this they will be much better placed to deal with issues like this quickly and take action themselves to maintain public trust and confidence by stopping problems before they happen."
The FRSB is expected to publish its final investigation report in the coming weeks.