Commission warning power could be used as a 'lightning bolt to punish charities'

Umbrella bodies express concern in their responses to a consultation on the regulator's new sanction

Charity Commission guidance on its new power to issue official warnings is not clear enough and the power could be used as a "lightning bolt" to punish charities, sector bodies have warned.

The comments came in responses to the consultation on the draft guidance, which closed today, before the power comes into force in November.

The commission said yesterday it would give further consideration to the points raised by some of the consultation responses as it developed the final version of the guidance.

The new power will allow the commission to issue official warnings when it considers there has been a breach of trust or duty or other misconduct or mismanagement that is not serious enough to warrant a full statutory inquiry.

The guidance said the commission would usually give 14 days’ notice of its intention to issue a warning and would usually publish the warning. Once published, it said, the warning would remain on the charity’s page on the commission website for two years.

But the Charity Finance Group, the National Council for Voluntary Organisations, the Association of Charitable Foundations, the charity leaders body Acevo, the Directory of Social Change and the Charity Law Association working party on warnings all said in their responses that the guidance lacked clarity. 

The CFG response said the guidance outlined a punitive approach that was not in the spirit of the initial proposals to parliament.

"We are concerned that the Charity Commission may be forced into using this new power by external stakeholders, such as the media, as a ‘lightning bolt’ to punish charities without the checks and balances that come with a statutory inquiry," it said.

The DSC agreed in its response, saying there was a risk that the warnings could be issued on the back of negative media coverage, which could be biased on inaccurate. It said this should not become a "power to pillory".

The CLA working party response said the guidance needed to be clear on when the commission could issue a warning and when it could not.

"Throughout the guidance, there is a tendency to compare the warning power with the statutory inquiry power; this would have the effect in the reader’s mind of equating the two in terms of 'seriousness'," the response said. 

It said a 14-day notice period for representations was too short and should be lengthened to 28 days, and publishing a warning should not be a default position.

Where the warnings were published, it said, they should be removed after six months or if rectified, the response said.

A joint response from the NCVO and the ACF echoed the CLA’s concerns about publication and when the power could be used.

"The power is being proposed as a sanction rather than a warning – a punitive measure, close to the commission’s statutory inquiry power," it said.

Acevo called for the commission to rethink the guidance, saying it lacked strategic vision and did not make clear how the new power would link to the other strands of the Charity Commission’s work.

A commission spokesman said the warning power would not be a substitute for its casework.

"We will not issue warnings as the easy option for minor misdemeanours; and nor will warnings just come ‘out of the blue," he said. "In almost all cases, we expect charities to have engagement with the charity on the matter of concern before a warning is issued."

Trustees ignored commission action plans in 20 to 30 per cent of cases involving misconduct or mismanagement, and warnings would help to address this, he said.

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