The Charity Commission’s guidance on its new powers to disqualify trustees is too broad and allows the commission too much discretion, according to the National Council for Voluntary Organisations and the charity chief executives body Acevo.
The power to disqualify, which was introduced in the Charities (Protection and Social Investment) Act 2016, will allow the commission to remove trustees and prevent them from holding further board or senior management positions at charities if they are deemed unfit to hold such roles.
The Charity Commission opened a consultation on 23 May asking for views on how it would use its new powers. It closed yesterday.
In the consultation document, the commission set out three tests for making a disqualification order. One of these was that the trustee should meet one of six conditions, five of which covered criminality, misconduct or mismanagement at a charity, and fitness to hold a leadership position.
There is concern in the sector that the sixth condition, which is called condition F and which covers "other conduct, whether or not in relation to a charity that is, or is likely to be, damaging to public trust and confidence in a charity or charities", is too broad.
In its response to the consultation, the NCVO said that although it agreed in principle that the commission should be able to disqualify trustees, it was concerned the current policy "leaves room for considerable subjective decision-making by the commission".
The other two tests for disqualifying a trustee outlined in the consultation were that a person would be considered unfit to be a trustee and that the order to disqualify them would be in the public interest.
The NCVO’s response said: "We remain concerned that, although the three-stage test outlined superficially appears to be robust, in fact it is insufficiently defined and lacks appropriate objective criteria by which to measure the reasonableness of the commission’s decision.
"It continues to be unclear what the commission’s intended approach will be when deciding whether to use the power and, if so, what the scope and period of disqualification will be."
In particular, it picked out concerns with the "vague and open wording" in condition F and said that the criteria the commission would use to assess someone’s fitness to be a trustee was "too subjective".
The NCVO response questioned whether the commission’s focus on the public interest was appropriate, saying "we do not believe that what the public thinks should be a key factor in making use of a regulatory power and disqualifying individuals from their role as trustees".
In a statement, the charity leaders body Acevo also criticised the ambiguity of the guidance.
It said: "We are concerned that the measures proposed in the consultation are too broad. We recommend that further guidance is produced. This guidance would clearly communicate the circumstances in which the Charity Commission would use its new power and would make transparent the rationale behind any decision.
"Moreover, prior to any final decision to remove a trustee based on condition F in test one, the commission would need to issue a clear argument in order to provide that trustee the opportunity of defence and/or appeal."