New reserve powers will be put into a charities bill to give government powers to force charities to sign up to a fundraising self-regulator, and to introduce a statutory regulator if necessary, minister for civil society Rob Wilson said today.
Wilson was giving evidence to the Public Administration and Constitutional Affairs select committee, which is conducting an inquiry into fundraising regulation.
The review follows a series of critical articles in national newspapers, which prompted Wilson to ask Sir Stuart Etherington, chief executive of NCVO, to conduct a review of regulation. Etherington proposed removing regulatory responsibility from the Institute of Fundraising, Fundraising Standards Board and Public Fundraising Association, and setting up a new fundraising regulator. Wilson accepted the recommendations in full.
The new regulator will have more substantial powers, including greater support from the Charity Commission, a Fundraising Preference Service which would allow a donor to opt out of all charity communications, and a requirement that donors opt in to all future charity communications.
“We’re making very good progress on implementing the recommendations,” Wilson told the committee. “We hope to have a chair in place imminently.”
Sir Stuart Etherington, speaking during the preceding evidence session, told the committee that he anticipated the chair of the regulator would appoint other board members, and that the board would appoint senior staff.
He said he felt it was important to have a consumer representative on the board of the new regular, and suggested it could be someone from the Consumers’ Association.
‘Last chance for self-regulation’
Wilson told the committee that he believed this was “the last chance” for self-regulation, and that statutory regulation would have to be introduced if it failed.
He said he envisaged that PACAC would conduct a review within a year. However committee members questioned whether they had sufficient expertise to fulfil the role envisioned for it by the minister and the Etherington Review, because it did not have the necessary knowledge to ascertain whether the regulator was succeeding.
“In the absence of knowledge of the processes that are continuing, how could we possibly know what questions to ask?” said Committee member David Jones, Conservative MP for Clwyd West.
Etherington also spoke about the Fundraising Preference Service – a service which would allow a donor to opt out of all charity communications. He said such a service was necessary because of the number of vulnerable donors who are receiving communications from multiple charities via many different channels.
He suggested that it would act as a “reset button”, removing donors from all existing communications – suggesting that it may not prevent charities from contacting donors permanently in the manner of the Telephone Preference Service and the Mail Preference Service.
“We felt it was important to have the option of opting out of any other communication,” he said. “The FPS still needs a bit of work, but we knew what we were trying to achieve with it.”
He said he understood the ICO had expressed concerns about the nature of the FPS because it would not be able to regulate it. He said he did not expect the ICO to do so, and said the FPS would not have statutory force.
However he also said that he believed the ICO has not historically had a close enough relationship with the charity sector.
‘Why did no one know?’
The committee was highly critical of the fact that no one in the charity sector appeared to be aware of systemic poor practice prior to the Daily Mail investigations.
“Everyone who has come in front of this committee has said they didn’t know what was going on,” said Bernard Jenkin, Conservative MP for Harwich and chair of the committee.
Wilson said he had already been working on changes to fundraising regulation before the crisis broke, but conceded he had not known about the scale of abuse.
“It was quite clear that these poor processes were systemic,” he said. “It was taking place at large charities and there was manipulation of vulnerable people. There were errant organisations that were not adhering to the rules.”
Etherington said that trustees had not been sufficiently involved in scrutinising fundraising.
“Fundraising wasn’t being taken seriously enough at a senior level,” Etherington said. “We suggest trustees take a more serious look at this.”
Etherington also said, in response to a question, that he could “see no reason” why the government should not enshrine in law a limit on how long a charity could have an individual serve as a trustee.
Etherington also spoke about the importance of public knowledge of the new regulator. He said a major problem for the existing regulatory bodies was that no one knew they should contact them.
William Shawcross, chair of the Charity Commission, also giving evidence, said his organisation was ready to support the new regulator. However he cautioned against state regulation of fundraising, saying that if charities were over-regulated they would just become another arm of the state.
