Jo Coleman: Draft guidance has not made the new disqualification power any clearer

It does not help trustees understand the process the Charity Commission will follow, writes the charities partner at the law firm Bond Dickinson

Jo Coleman
Jo Coleman

The Charities (Protection and Social Investment) Act 2016 gives the Charity Commission a robust new power to disqualify charity trustees. As the act itself contains only the bare bones of this new discretionary power, the sector was hoping that the new guidance would clarify just how and when the new power will be used. 

However, the present draft is lacking in detail and, in response to the consultation on the policy paper (which has just closed), there have been calls for it to be rewritten so that it becomes the "appropriate, proportionate and detailed guidance" which the minister had promised.

For most trustees this new power will be of passing interest only.  However, as the commission will be looking to exercise this new power, trustees should familiarise themselves with the relevant criteria and the serious consequences of disqualification. 

Not only would disqualification from acting as a charity trustee be serious in itself, with damaging reputational consequences for the individual concerned, but anyone disqualified under this new power will also be disqualified from holding a senior management position within a charity.

The act contains a three-limbed test which must be satisfied in order for the commission to make an order.

First, the person must be unfit to be a charity trustee (either generally or in relation to a specific class of charity) and second, the disqualification must be desirable in the public interest in order to protect public trust and confidence in charities.

Third, one of the following six conditions must be met:

A) the person has been cautioned for an offence involving a charity for which a conviction would bring automatic disqualification;

B) they have been convicted of an offence involving a charity outside the UK where the act if done in the UK would bring automatic disqualification;

C) HM Revenue & Customs finds the person is not a ‘fit and proper person’ to be a manager of a charity;

]D) a trustee, officer, agent or employee of a charity was responsible for, contributed to, or facilitated misconduct or mismanagement in a charity, or where the person knew of the misconduct or mismanagement and failed to take any reasonable steps to oppose it;

E) the same as in D, but where the person was an officer or employee of a corporate trustee of the charity; 

F) a person has engaged in any other conduct, whether or not in relation to a charity, that is or is likely to be damaging to public trust and confidence in charity/charities.

The guidance on the three-limbed test does not really take the reader any further forward. 

To start with, condition F is very widely drawn and, without more, it is impossible to know what mischief it is intended to catch, or how it will be used.

There is also no list of conduct matters that demonstrate ‘unfitness’, which is described in broad terms only as a failure of honesty and integrity, competence or credibility. While a number of examples under each heading are given, again these are widely drawn.

And the commission has yet to confirm that it will only consider conduct which is both ‘relevant and serious’, although this qualification was accepted by the minister.

Overall, the guidance does not help the reader to understand the process that the commission will follow in determining whether an order should be made. 

It is hoped that revised guidance will provide much needed clarification.

Jo Coleman is charities partner at the law firm Bond Dickinson

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