he Charity Commission has said it will “consider further” concerns about how it will use the power to issue official warnings, following concerns from the sector about its draft guidance. 

Draft guidance was issued for consultation in July and the deadline to submit a response to the Commission is tomorrow.

NCVO, the Charity Finance Group and charity law firm BWB initially criticised the draft guidance for not including enough safeguards and for being misleading.
In July Rosamund McCarthy, partner at charity law firm Bates Wells Braithwaite, said her firm would be asking for the guidance to be “materially revised”.

She said: “I am very concerned that  the draft guidance is misleading in a number of respects and does not contain a number of the key assurances given by the minister for civil society during the report stage of the bill.”

The Commission said that so far it has received 30 responses, though a number of sector bodies contacted by Civil News this morning said that they were still finalising their responses.

 
Commission’s statement

In a statement the Commission said: “We have received over 30 responses so far to the warnings consultation from a wide range of organisations. 

“There is a clear recognition of the need for this type of power but we recognise there are also a number of helpful points that have been raised which we will consider further, particularly seeking further clarity in some areas. 

“We have held meetings over the summer to speak directly with a number of interested parties and look forward to meeting with the Charity Law Association next week to hear further. As with all consultations, there will be some detail to work through and we look forward to doing so in the coming weeks. 

“We encourage those who are yet to submit their response to do so before the deadline tomorrow.”
What is the warning power?
The power to issue an official warning, and make it public, was part of the Charities (Protection and Social Investment) Act 2016. It will come into force on 1 November 2016. 

The draft guidance states that the power will supplement the Commission’s existing powers for dealing with wrongdoing in charities. It will be able to issue an official warning when it considers there has been a breach of trust or duty, or other misconduct and mismanagement in the charity.

It can be issued to a charity trustee, or trustee for a charity, where it considers that they have committed a breach of trust or duty, or other misconduct or mismanagement. An official warning can also be issued to a charity, in connection with which the commission considers a breach of trust or duty or other misconduct or mismanagement has been committed.

A decision on whether to issue an official warning is based on the assessment of the risks, which involves taking into account factors including the level of financial loss to the charity; the likelihood of recovering any funds lost to the charity; the risk of harm to beneficiaries; and whether the misconduct or mismanagement was an isolated or repeated incident.

The draft guidance says that the Commission can publish an official warning, or the variation or withdrawal of an official warning. It would publish the warning along the same guidelines as it publishes statutory inquiries and regulatory case reports which state that the Commission would usually publish something with a few exceptions. These include it being detrimental to a particular individual or group of individuals, for example a risk to someone’s personal safety.

The consultation, available here, closes tomorrow.