The Charity Commission has explained how it would use a new statutory power to disqualify trustees outlined in the Charities (Protection and Social Investment) Bill, which was introduced to the House of Lords yesterday.  

In a statement released today, the Commission welcomed the power and said it will enable it to better “protect charities from being run by individuals who are clearly not fit to do so”.

A disqualification order would only be able to be made by the regulator against an individual if three tests are met. These are: that "at least one of six" conditions apply, that the person is “unfit to be a trustee” and that the order is “desirable in the public interest” in order to protect trust and confidence in the sector.

Under the bill, a person can be disqualified from holding a trustee position in the sector for up to 15 years. 

The right to disqualify trustees is one of a number of new powers the bill has granted the regulator, with others including the right to direct a charity to close after an investigation and pre-emptive power to stop a charity breaching its legal obligations.

The new bill also implements certain Law Commission regulations which will give charities more “power” to make social investments.

The bill, mentioned in the last Queen’s Speech, is an updated version of the Protection of Charities Bill and was introduced into the House of Lords yesterday. The minister for civil society, Rob Wilson, joined the Charity Commission in welcoming its introduction.

“It is important that we protect public trust and confidence in charities by equipping the independent regulator with the tools it needs to do its job,” said Wilson.

“I am also pleased that the bill will take forward the Law Commission’s recommendation for a social investment power for charities. Bringing clarity to the law in this area will make it easier for charities to participate and achieve a positive social impact with their investments.”

Voluntary sector response

The bill has been met with cautious optimism in the sector, with a spokeswoman for NCVO welcoming the bill, even though she felt the powers outlined in it were “unlikely to be used more than a handful of times a year”.

A Navca spokesperson suggested that the bill was likely to be “of more benefit to the Commission than to charities themselves,” but welcomed the added clarity on social investment.

Asheem Singh, director of public policy at Acevo, said: “The Charities (Protection and Social Investment) Bill has been through pre-legislative scrutiny but we have doubts about the number of safeguards it will include on the Charity Commission’s new powers.”