A number of leading charity lawyers believe that the regulatory compliance cases conducted by the Charity Commission in recent years were unlawful – including the investigation into the Atlantic Bridge charity set up by Liam Fox MP.

Ian Davies, a former Charity Commission lawyer and most recently a solicitor at Wilsons, told the Commission’s head of legal services Kenneth Dibble at the Charity Law Association conference last week that many lawyers believed the regulatory investigations were unlawful.

Expanding on this later, he told civilsociety.co.uk that regulatory investigations were "effectively an abuse of power” by the regulator.

“The Charity Commission is a creature of statute and only has whatever powers Parliament gives it.  There is a statutory procedure for carrying out inquiries which is in the Charities Act.

“It is not open to the Commission to frustrate the will of Parliament by going off on some frolic of their own and setting up some informal parallel system – however convenient and economic it may be.”

As a result, the investigation into Atlantic Bridge was unlawful, Davies said. “They said, ‘we are not conducting an inquiry’ and they weren’t, so it is a nullity and should never have happened in the first place. But quite what the relief would be I don’t know.”

He said he knew that other charity lawyers held the same opinion about the legality of regulatory cases: “This is not some independent eccentric view.”

Moira Protani, head of charities at Wilsons, is one such lawyer.  She said the Commission’s habit of publishing regulatory case reports often embarrassed the trustees of the relevant charity by leaving the reader with the impression they had done something wrong, yet because there was no legal basis for the reports, the trustees had no right of redress.

“If there was a statutory inquiry the trustees could appeal the decision or take it to the Charity Tribunal, or do any number of things you would expect in a civilised and democratic society,” she said. “But where this undemocratic, unlawful and informal type of inquiry has been occurring, trustees have no redress, and that’s not right.”

She said that over the years several lawyers had complained to the Commission that the investigations were unlawful, and that although the regulator might blame budget cuts for its decision to scrap them, she suspected “they know the chips are down”.

Regarding the Atlantic Bridge case, Protani said the Commission had no power to tell a charity to cease its activities, as it did in that situation.

“If they thought the charity was not acting within its objects they could have opened an inquiry and removed the trustees,” she said. “They can regulate the charity if it’s done something wrong, but they can’t just tell them to cease all their activities.”

Regulatory investigations ‘proportionate and not unlawful’

However, Anne-Marie Piper, partner at Farrer & Co, did not agree that the regulatory compliance cases were unlawful; in fact, she described them as "a proportionate approach".

“Whilst it's true the Commission doesn't have a specific statutory authority, they have got a regulatory duty to disseminate good practice and they took the view that this is a way to do it. I thought it was a balanced approach.”

The Commission didn’t publish reports about every regulatory compliance case it investigated, only the ones where it felt there were lessons for the wider sector, Piper added. “And they never named individuals.”

“I think it’s a shame they are not doing them any more,” she concluded. “I thought they were a useful way of illustrating the things that were happening in the real world and disseminating learning in a practical way.”

Commission ‘has complete discretion’

The Charity Commission defended its conduct of the cases: “The Commission’s view is that regulatory compliance cases are not unlawful and that is not the reason we are restructuring this work or only carrying out statutory inquiries for our formal investigations work.

“The Commission, by virtue of the Charities Act, has complete discretion as to how it carries out its casework including how it decides to investigate or detect abuse.”