July 4, 2016

Draft guidance on charity “warnings” is published

As part of the Charities Act, which completed its passage through Parliament earlier this year, the regulator will have the option to issue official warnings to third sector organisations.

The measures are designed to bolster the regulator’s ability to take action against those charities which are falling short of their obligations, although the proposals have proven controversial in many quarters.

The Charity Law Association had said previously that there was a danger that the watchdog could use the power “inappropriately.”

Now further details about how the warning system could work in practice have been published by the Commission’s officials.

The draft guidance explains the circumstances in which warnings could be issued, the amount of notice that would be given and where they would be published.

Under the new regime, warnings could be issued to either a charity trustee or a charity itself in cases where there has been a breach of trust, misconduct or mismanagement. They will usually be issued in response to “low to mid-level concern” with a statutory inquiry favoured in the most serious cases.

A number of factors will be taken into consideration before deciding to issue a warning. These include whether the charity has made an honest mistake, whether it is likely to happen again and the likely damage to public confidence in the charity or sector concerned.

Sarah Atkinson, the Charity Commission’s director of policy and communications, said: “The power to issue an official warning is an important new power for the commission to tackle misconduct and mismanagement proportionately and effectively.”

The consultation exercise is set to run until September 28th.

Royds has a wealth of experience advising charity clients on the laws and regulations affecting the sector. For further advice on these matters contact Tony Millson or Deanna Hurst.

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