The Cup Trust tax-avoidance scandal has been a disaster for the voluntary sector, William Shawcross, the chair of the Charity Commission, has told MPs.
Giving evidence before the Public Accounts Committee in Westminster this morning, Shawcross said that public trust in charities had been harmed by the revelations about the Cup Trust, which raised £176.5m in private donations over two years but spent only £55,000 on good causes.
"This whole thing has been a disaster for the charity sector," Shawcross said. "It has affected public trust and confidence in charities.
"It is very damaging to the sector and it is very damaging to the Charity Commission that this has happened."
Margaret Hodge, chair of the committee, said that the National Audit Office had agreed to "make a longer study" into the commission's regulatory conduct.
She said that the committee was "pretty appalled" by the commission and questioned whether it had "the right regulatory regime" to ensure that charities were being properly regulated.
She questioned whether it was proper that the commission made only 20 compliance visits a year, and said that the commission appeared never to have used several of its powers.
"We have questions about whether you're fit for purpose," she said.
Richard Bacon, Conservative MP for South Norfolk and another member of the committee, said a report published in 2001 called Giving Confidently had registered concerns about the lack of investigation carried out by the Charity Commission, and had cited previous concerns about the same issue going back to 1988.
"You're a scratched record," he said. "This has been a problem for 25 years."
Shawcross said he felt the commission should have made public the fact that it had investigated the Cup Trust and had not been able to take action, and said that the commission would be more open if similar issues arose in future.
He admitted that the regulator "should have asked more questions".
"The fact that it was based in the British Virgin Islands should have raised a red flag," said Shawcross.