The Public Administration Select Committee has labelled the Charity Tribunal system "a failure", and has bemoaned what it calls the Charity Commission’s "reliance" on the process to resolve disputes.

In today's report, The role of the Charity Commission and “public benefit”: Post-legislative scrutiny of the Charities Act 2006, the PASC said that the present policy for determining questions of public benefit “has proved disastrous in terms of the time and commitment of the Charity Commission and the charities involved”.

The PASC said: “The Charity Commission’s reliance on the Charity Tribunal to resolve contentious areas of the law means, in practice, that some of the cost of regulating the sector falls on the particular charities concerned, taking away vital funds that could be used to fulfil their charitable objectives.

“This amounts to an abdication of responsibility by the Commission, and an expensive, time-consuming and unjust way to test the law."

The report goes on to say that the tribunal system has failed in its objectives to reduce the cost of disputes.

"The Commission should devise informal dispute resolution procedures and should not use the tribunal system as a means of determining the law, except as a last resort,” it says.

Responding, Charity Commission chair William Shawcross said: “Whilst we agree with many that the Charity Tribunal is not yet the cost-effective route that either the Commission or charities would have hoped for, we regard the Tribunal as an important element in the infrastructure of charity regulation. 

"It is an essential mechanism beyond the Commission's own decision review process, which helps to clarify matters of law which does not amount to ‘an abdication’ of the Commission's responsibility.”

Sector must take responsibility for complaints

Elsewhere in the report, the PASC calls on the sector to fulfil its obligations with regards to dealing with complaints.

“We heard worrying testimony from people with complaints about the way charities have treated them, as employees, trustees or volunteers,” the document reads. “The sector must recognise the risk to the reputation of charities as a whole from such complaints, and must take responsibility for resolving these matters, through internal complaints mechanisms and independent appeal processes.

“We agree with Lord Hodgson that, while superficially attractive, the costs of a charity ombudsman should not fall upon the government or the regulator, and should be borne by the sector itself.”

More on PASC report:

Public benefit test is critically flawed, MPs tell government

Bubb: PASC report is 'regulatory madness'

PASC puts fundraising self-regulation ‘on notice’

PASC supports Hodgson recommendation to fine late filers

PASC: Charities should publish lobbying spend and public income in annual returns

Commission should review its handling of the Cup Trust case, say MPs