The bill giving new powers to the Charity Commission has become law after being granted royal assent yesterday afternoon.
The Charities (Protection and Social Investment) Act gives the Charity Commission new powers to issue warnings to charities and to suspend and disqualify trustees, and gives charities greater scope to make social investments.
The act was first unveiled as the Protection of Charities Act in the Queen’s speech in June 2014, but since then has gained clauses clarifying the law on using charitable funds to make social investments and allowing the Charity Commission to act as a legal backstop for the new Fundraising Regulator.
Rob Wilson, the Minister for Civil Society, said: "The Charities (Protection and Social Investment) Bill 2016 is part of a big reform programme for charities and social enterprises which will support a sector that is more resilient, independent and sustainable.
"Through this act, the Charity Commission will be better able to tackle abuses, charities will be supported to participate in social investment and the sector can take a more robust stance towards fundraising."
The development of the act has not been without controversy, with some sector bodies and charity lawyers raising concerns about the extent of the new powers it confers on the commission.
The new law will allow the commission to issue statutory warnings to any trustee or charity when it considers a breach of trust or duty or other misconduct or mismanagement has occurred, and to publish them if it saw fit.
The charity would be unable to appeal against the warnings at the charity tribunal, and instead would be forced to take the matter through the more expensive judicial review process. During the third reading of the bill, Wilson agreed that charities would be given 14 days’ notice of a decision to publish a warning.
The new powers allow the commission to disqualify anyone from being a trustee if it judges any of their past or continuing behaviour likely to damage public trust and confidence in charities.
The act would also automatically exclude people with criminal convictions for money laundering, terrorism and sexual offences from serving as trustees or working in the senior management of charities, although this element of the act is not expected to be activated for at least 12 months to allow time for affected charities and individuals to apply for a waiver.