The recent shift by the Charity Commission to ‘lighter touch’ regulation has had the effect of making it less accountable, Alison McKenna, the principal judge of the charity tribunal, said last night.
She told an audience at the Charity Law and Policy Unit at Liverpool University that the shift meant the commission was making fewer formal decisions, directions or orders that could be challenged in the tribunal.
"It seems to me that, even with the best of intentions, this has had the effect of diluting the commission’s accountability system and that we have now drifted a long way from the legislative thrust of the Charities Act 2006 in creating the tribunal," she said.
"Remember the Strategy Unit’s phrase about the commission needing to be challengeable ‘in fact and appearance’. I fear we may now have moved to a situation where the right to challenge the commission is in appearance only and not in fact."
McKenna argued that the role and remit of the tribunal should be considered in the review of the 2006 act that is due to take place next year.
She said the review should include:
- the impact of the commission’s regulatory shift
- the low number of cases coming to the tribunal
- the internal review system of the commission
- restrictions on commission decisions that can be referred to the tribunal, and
- whether the tribunal should have a power to authorise trustees to spend money pursuing tribunal cases.
McKenna said the low number of cases "raises the same questions about the regulatory health of the sector as it did when there were said to be too few cases going to the High Court".
She said she was bewildered by reports that some charity lawyers preferred to use the commission’s internal review system to settle a disputed case rather than go to the tribunal.
If a charity had limited resources to challenge a decision, McKenna said, they would get more "bang for their buck" by lodging a free email application to the tribunal, obtaining disclosure of commission papers and getting an independent public hearing.
"I ask rhetorically how the commission can dedicate its own resources to conducting internal reviews in the context of its current financial constraints," she said.
It was also difficult for case law to evolve, McKenna said, if disputes were not resolved in public: "The settlement of most disputes through the internal process has, I feel, meant that it is effectively the commission rather than the sector that is choosing which cases come forward to set a precedent."
McKenna said the government had rejected the recommendation of the joint parliamentary committee on the draft of the 2006 act that the tribunal should have the power to appeal against any decision of the commission.
Instead, it had gone for a restricted list that ran to eight pages, included 50 categories and was "esoteric if not entirely impenetrable... I can’t help feeling there could be a simpler arrangement."
She said the tribunal should have the power to allow trustees to spend money on cases because trustees might have been discouraged from using the tribunal for fear the commission would deem the expenditure inappropriate and tell them to reimburse the charity.
Read the full speech here.