Power to warn charities could become commission's 'weapon of choice', says solicitor Jo Coleman

The partner at IBB Solicitors tells the Charity Law Association conference that proposals in the Charities Protection and Social Investment Bill could have unintended consequences

Jo Coleman
Jo Coleman

The proposal to give the Charity Commission the power to issue official warnings to charities could have "serious and unintended consequences", Jo Coleman, a partner at IBB Solicitors, has warned.

Coleman, who chaired the Charity Law Association working party on the Charities Protection and Social Investment Bill, which is awaiting its second reading in the House of Commons, made the comments at the CLA conference in central London yesterday.

Under proposals contained in the bill, the commission would be able to issue official warnings to charities for minor offences – such as consistently submitting accounts late, or poor investment decisions – rather than opening full statutory inquiries.

Coleman expressed concern that the warnings could be used more widely. "What’s more difficult is if the warnings become a weapon of choice for the commission when dealing with more complex issues, such as when considering charities’ use of political campaigning or supporting unpopular causes," she said.

The warnings would contain directions for improvement, and failure to follow these would be considered evidence of misconduct or mismanagement and could lead to the suspension of a trustee for up to two years.

Charities issued with warnings would have no right to appeal, and the commission could choose to publish the warning.

Coleman said she and the CLA working group had lobbied hard but unsuccessfully for an appeals process, including when they appeared before the joint committee that scrutinised the bill in November, because they suspected "the official warning is itself going to become a punishment".

But Ben Harrison, senior policy adviser for civil society in the Cabinet Office, defended the proposed power, saying that for most charities the bill would not be "hugely relevant" and only those with mismanagement issues would be affected.

"At the moment, the commission could issue a non-statutory warning just by writing to the charity, and in some cases has done – and there’s no right to appeal there," he said.

"So the view was taken that it was not necessary to have a right of appeal to tribunal in relation to an official warning either.

"I think I can put my faith in the commission as the regulator and the tribunal as the body that reviews its powers to ensure that they are exercised proportionately."

Despite this, Coleman said she was worried the public warnings could have "serious and unintended consequences for a charity".

She said: "If warnings are going to be used to make an example of our clients, we’ll be thinking twice about writing to the commission to confess our clients’ sins and putting something right when it goes wrong, because how do we know that an official warning won’t follow?"

She said the warnings could have "a detrimental effect on the way good charities interact with the regulator".

She also repeated claims raised by the working party to the joint committee that the provisions in the bill for removing charity trustees over any conduct "damaging or likely to be damaging to public trust and confidence in charities generally" were too broad and unclear.

Harrison admitted that some of the powers in the bill were very broad, something he said on which the Cabinet Office did not "always see eye to eye" with the CLA working party, but insisted the commission needed such flexibility to regulate effectively.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners