Finance: Insurance blow to the Scots sector

Mathew Little

The newly created Office of the Scottish Charity Regulator has told charities that they cannot provide indemnity insurance for their trustees.

The watchdog said trustee insurance counts as remuneration under the terms of the Charity and Trustee Investment (Scotland) Act 2005 and is considered a personal benefit.

Many unincorporated charities offer indemnity insurance to trustees so they won't be personally liable for breaches of the law. The Scottish Council for Voluntary Organisations has written to OSCR on the issue and is awaiting a response.

"We have heard from a range of organisations that are concerned about the mixed messages circulating on this issue," said Lucy McTernan, director of corporate affairs at SCVO.

"Although some might question the real value for money of such policies, the question of whether or not they are allowable practice for charities needs to be clarified as a matter of urgency."

In a statement, the OSCR said it recognised its position "might have unfortunate consequences in discouraging trustees, but this should be seen in perspective".

Jane Ryder, chief executive of OSCR, said its view was shared by a number of solicitors.

OSCR has raised the issue with the Scottish Executive, which is considering whether action needs to be taken.

In England and Wales, trustee indemnity insurance is considered a personal benefit but is permitted if charities can show that it is in their best interests.

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