The crossbench peer Lord Low of Dalston has raised concerns that the Charity Commission is focusing too heavily on its enforcement role, which he warned could be a "false economy" that would lead to more enforcement work in the future.
Low, who chairs the Low Commission on Civil Society Regulation, made the comments to William Shawcross, chair of the Charity Commission, during a debate about the role of the regulator at the annual conference of the charity leaders group Acevo in London on Thursday.
Low and Shawcross were joined in the debate by Lesley-Anne Alexander, chief executive of the sight-loss charity the RNIB, of which Low is a former chair, and Jehanghir Malik, chief executive of the sports charity Inspiration International.
Low said: "We’re aware of worries that have been expressed that the commission has perhaps leaned too much to the regulatory role and abandoned its role of supporting charities.
"We understand the pressures on the commission, which has necessarily got to make hard choices – but we’re a bit worried it could be a false economy.
"And that could lead to a greater enforcement caseload further down the line, which could be just as difficult financially."
Shawcross told delegates that the commission had made a conscious choice to focus on regulation over advice after its budget was cut by almost 50 per cent in real terms in recent years.
"We have now had to concentrate much more on regulation in the belief that protecting charities from abuse enables the public to have confidence to give their money wisely and well," he said.
He said the commission was aiming to offer support to charities within its stretched resources.
Low said Baroness Young, chief executive of Diabetes UK, had described the commission’s current regime as "hostile to the sector" and told him the regulator needed to "examine its soul on how it’s currently behaving".
Low said: "The Charity Commission might look at that as a piece of critical friendship."
Shawcross said he could see why Young had said that, but he did not think she was correct.
He also quoted commission research that found 72 per cent of the public thought charities in England and Wales were regulated effectively, and 81 per cent believed the commission was fair and impartial.
Alexander highlighted the number of regulatory bodies that already oversaw charities alongside the commission – such as HM Revenue & Customs, Ofsted and the Care Quality Commission – and asked whether, in this context, another body to oversee fundraising, as proposed in Sir Stuart Etherington’s review of the self-regulation of fundraising, would make a difference.
"I could go on for a very long time about the regulation that is already in my life and that I already fundraise for," she said. "We’ve already got a regulator. Let’s not have any more. Let’s stop treating the symptom and start treating the cause. And let’s make the Charity Commission work properly and regulate the sector effectively."
Her comments were echoed by Malik, previously a director of Islamic Relief UK, who said that since the attacks of 11 September 2001 fears about terrorism had created extra regulation for international aid agencies.
"The regulation in that sector has swung so far to the right that the cost of compliance has become too severe for many organisations," he said.
"The key here is proportionality and balance, because we don’t want pendulums swinging from one to another as a knee-jerk reaction."
Shawcross said he completely agreed that there was "far too much regulation in the world".
He said: "The surplus of regulation is why I said we should support Sir Stuart Etherington’s plan for self-regulation of fundraising, not introduce more legislation."
Low also called for balance, both in the commission’s work and in the view of the commission itself.
"It doesn’t get everything right, but it does its job in very difficult circumstances," he said.