The Joint Committee of Lords and Commons has published its Report on the Draft Protection of Charities Bill. Its principal conclusions and recommendations are as follows:

• Because lots of charities are excepted or exempted from the requirement to register with the Charity Commission it does not have full regulatory control over the sector – which makes it harder to ascertain the full scale of abuse. [43] In the next substantial review of charity law the Government should consider whether all charities should be obliged to register with the Commission. [ 44]

• The Commission has to tread a fine line between its role as regulator and as ‘facilitator’ helping charities, especially smaller ones, to understand the nature of their obligations under the law. But it has to guard against providing advice that the recipients inevitably sees a regulation, and avoid ‘regulatory creep’. [57]

• The draft Bill would give the Commission new powers of enforcement and, potentially, new areas of activity. If the Commission is to be asked to carry out its existing statutory remit in the most effective way its resourcing must be considered. [58]

• Providing the Commission’s online advice within the current pared-down framework of the gov.uk website is unlikely to give charities what they need – and the advice has become more difficult for users to navigate. [60] The Government should review the Commission’s pages on gov.uk and work with it to improve the availability and accessibility of the information. [61]

• The Commission is unlikely to improve its non-regulatory functions without additional resource – though the additional funding for greater digitisation should free up additional resource for other work. [67]

• The NAO found that the Commission needed to do more develop a better understanding of the costs and benefits of effective regulation – which will be essential if it is to persuade the Government to give it more resources. [68] 


• A single point of registration could have significant advantages for all parties involved, particularly for smaller and poorer charities; and it is regrettable that rollout has been delayed until April 2016. [79]

As to the vexed question of Offences leading to automatic disqualification and Discretionary disqualifying power, the Committee felt that the inclusion in clause 8 of the Bill of convictions for money-laundering, bribery, misconduct in a public office, perjury and perverting the course of justice as disqualifications for trusteeship was appropriate in order to close loopholes in the law. [170] But the Committee was doubtful as to whether removal from a post as officer, agent or employee of a charity should lead to automatic disqualification as a charity trustee or would be more appropriately addressed through the discretionary disqualification provisions in clause 9.

The Committee thought that, on balance, including a conviction for terrorism offences to the list of specified offences in clause 8 was likely to help prevent the abuse of charitable funds by terrorists. [176] But the difficulties posed by current terrorism legislation for the protection of charities working overseas to deliver humanitarian aid might have a ‘chilling effect’ on NGOs’ activities overseas. [185] The Government should ask the DPP to publish guidance for charities setting out her approach to prosecution under the counter-terrorism legislation and on the application of the public interest test. [192]

On the issue of “fit and proper persons”, the Cabinet Office should produces a non-exhaustive list of matters that rendered a person “unfit” to act as a charity trustee. [215] The Committee noted the calls for a more joined-up approach between tax and charity law  – HMRC already has a “fit and proper person” test in relation to Gift Aid claims – but was concerned that many witnesses had significant misgivings about applying tax law to charity regulation and would not support including the HMRC test in the Bill. [221] 
Before finalising any provision on a “fit and proper person” test, there should be further discussions between the Charity Commission, HMRC and the Cabinet Office, with a view to addressing the concerns raised. [222] 
 The Committee also felt that the provisions on cautions and their application were not as clear as they might be [233–235] 
and did not support the proposal on overseas convictions and cautions. [241]

On exclusion from “positions of power” in charities, the Committee understood the potential value of the proposed provision but would only support its inclusion with some additional safeguards. [269] 
Consideration should be given to incorporating the procedures for disqualification included in the company directors’ disqualification legislation; and the Cabinet Office should examine the model of the Financial Conduct Authority’s fitness and propriety test to design a regime which is human rights and employment rights compliant. [270]

Comment

Sharp-eyed readers (if any such have managed to get this far without nodding off) will have realised that the proposals [43 & 44] to end excepted and exempted status will have a considerable impact on the Churches and church charities – the vast majority of which are currently excepted from the requirement to register with the Commission unless their income exceeds £100,000.

At present, excepted status is due to end in 2021 when the current Regulations run out: given the numbers involved, the size of the Commission’s staff and the fact that the Commission is already overworked and seriously under-resourced, a premature end to excepted status would be a nightmare. What would be helpful, however, is a forward plan for phased and orderly registration in the run-up to 2021. The alternative will be an unseemly scramble.