Commission to launch consultation on trustee disqualification power

A timetable published by the Cabinet Office says the sanction will be available to the regulator from July

Charity Commission
Charity Commission

The Charity Commission will today open a consultation on its new power to disqualify trustees, which the government has revealed will come into force in July.

On Friday, the Cabinet Office released its timetable for bringing the Charities (Protection and Social Investment) Act into force, which says there will be a consultation on the regulator’s new power to disqualify trustees it deems likely to damage the reputation of a charity. The commission said the consultation would be opened today. 

The timetable says the commission’s new power to issue warnings for low or medium-level concerns that do not warrant a full statutory inquiry would be available from October.

The power to disqualify will allow the commission to remove trustees and prevent them from holding further board or senior management positions at charities if they have been responsible for or aware of misconduct or mismanagement at a charity, but also if the commission deems any past or continuing behaviour to be likely to damage public trust in charities.

The power has been criticised by sector leaders and groups as too broad and allowing the commission too much discretion.

The power to issue warnings for low or medium-level concerns that do not warrant a full statutory inquiry was also among the most controversial in the bill.

Jo Coleman, the charity lawyer who chaired the Charity Law Association’s working party on the bill, expressed concerns at the CLA annual conference last year that warnings would be used as the "commission’s weapon of choice", and said the warnings could have a harmful effect on charities’ reputations.

The commission said it estimated warnings would be used 20 to 30 times a year, but it could increase the number if they were found to be effective.

The timetable says the commission’s new powers will be introduced in three waves in July and October this year, and in April 2017.

The new rules that will automatically disqualify people with criminal convictions for fraud, terrorism and sexual offences will be introduced in April 2017 in order to give affected trustees and charities time to prepare, in line with a previous promise by Rob Wilson, the Minister for Civil Society.

As well as the power to disqualify trustees, the first commencement order in July will also allow the commission to direct a charity be wound up and its assets given to another charity, prevent charities taking certain actions and act as a back-stop to the new Fundraising Regulator.

From the same month, charities will also be allowed to make social investments.

The October commencement order will allow the commission to make warnings, but will also require charities to include details of their fundraising arrangements in their annual returns.

A review of the act will take place before 16 March 2019 and the findings will be published by 16 March 2020, as required by the act itself.

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