Charities Act gives new powers to regulator

Wheels were set in motion for the new legislation three years ago, with a newspaper investigation into an alleged gift aid scam. The Times report led to significant criticism of the Charity Commission, with MPs accusing the regulator of spending too little time on enforcement.

The watchdog, for its part, made the case that if it was to exert tighter control over third sector organisations then it would need new powers.

Towards the end of 2013, the Government launched a consultation into plans to give wide-reaching new powers to the regulator. This exercise would lay the ground for the Charities Bill which recently received Royal Assent.

The legislation hands a number of new powers to the Charity Commission, most notably the ability to issue public warnings to a trustee or charity in cases where it is believed that a “breach of trust or duty or other misconduct or mismanagement” has occurred.

The legislation also widens the number of criminal offences which automatically disqualify someone from becoming a charity trustee and introduces requirements for charities with an income of over £1million to include details about their approach to fundraising in their annual report.

Other measures considered during the Bill’s passage through Parliament – such as tighter controls on fundraising and an attempt to undo aspects of the Lobbying Act – were ultimately left out of the final version.

For their part, many charities remain concerned that there may not be the necessary checks on the new powers and the way they are exercised. In an attempt to assuage fears, the Government has insisted that a review of the legislation will be conducted after three years.

For legal advice on charity governance and the implications of the Charities Act, please contact Tony Millson and Deanna Hurst in Royds’ Private Client team.