More power to disqualify?

Sam Younger, chief executive of the Charity Commission, has called for a widening of its powers to remove trustees

Sam Younger
Sam Younger

Last month Sam Younger, chief executive of the Charity Commission, said it had asked the government for "a general power of disqualification" of trustees.

In response to a critical Public Accounts Committee report on the commission's handling of the Cup Trust tax-avoidance scandal, Younger said it needed the power so that it could prevent those suspected of wrongdoing, but who had escaped removal by the commission, from being trustees again.

"Too often we see trustees resigning when we start the process of removing them, meaning that they are free to act as trustees for another charity," Younger said. "A general power of disqualification would allow us to stop that from happening."

This view was echoed by the commission's chair, William Shawcross, who told the Rathbones Annual Charity Symposium in London that the power would stop "unfit people flitting from charity to charity".

The Charities Act 2011 gives the commission and the High Court the power to remove a trustee on the grounds of misconduct or mismanagement. The act also lists the circumstances in which people are automatically disqualified - for example, people convicted of certain criminal offences or disqualified from being company directors.

Jane Hobson, head of policy at the commission, says the regulator would like this list to be reviewed and updated. She says it would also like the new power of disqualification to extend beyond trustees to "other positions of influence in charities".

Tom Murdoch, a senior associate at the law firm Stone King, says that although the commission already has extensive powers to remove trustees, it would be sensible for them to be widened. But he says any such power should be accompanied by an appropriate appeals process, because disqualifying someone from being a trustee restricts his or her ability to participate in public life. Without such a process, he says, the commission would be acting as judge, jury and executioner.

Murdoch says the timescale for implementing any changes is unclear, because the introduction of the disqualification power and a route of appeal, which might go to the charity tribunal, could both require primary legislation.

Murdoch also questions whether many trustees really do flit from charity to charity, as Shawcross claimed. "It is important not to lose sight of the fact that we are talking about a small minority and that, arguably, a greater priority might be to encourage more suitable people to become trustees," he says.

Murdoch says that any new power could widen the list of people who cannot become trustees to include those deemed unsuitable by the commission.

But Jonathan Brinsden, a partner at the law firm Bircham Dyson Bell, thinks the commission might wish to use something similar to the "fit and proper persons test" used by HM Revenue & Customs in relation to trustees when deciding whether to allow charities tax advantages.

Even if the commission does gain a new power to disqualify trustees, Brinsden says he is sceptical about how useful it would be. He argues that it already has extensive powers that it fails to use because of considerations of limited resources.

"We might have more confidence in what Sam Younger is saying if the commission made better use of the powers it has now," Brinsden says.

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