New powers proposed for the Charity Commission are too broad and the Commission might be too keen to put them to use, representatives of the Charity Law Association told a Parliamentary Committee yesterday.

The Parliamentary Joint Committee on the draft Protection of Charities Bill took evidence yesterday from the Charity Law Association on the draft bill.

Nicola Evans, a senior associate at Bircham Dyson Bell and a member of the executive board of the CLA, said that if the Commission was given extra robust powers it would suffer from a “heightened expectation” that they will be used.

Evans (pictured) said it needs to be explained to people what the changes proposed in the bill are and what they are designed to do.

She said the bill is looking at deficiencies that have been identified and that the Commission will not expect to use the proposed powers very often and that they are, by and large, for extreme circumstances.

She told the committee: “There is a risk that in giving the powers to the Commission there will be heightened expectations that they will be used”.

Evans also told the panel that the clause that says trustees can be disqualified for being unfit is too broad, and that there needs to be more of a definition of what the term “unfit” actually means.

She said that clause nine of the bill “essentially says that any conduct could be taken into account so seems to make the field incredibly wide”.

She said the rules should make clear to trustees what they had to do to stay within the law. "At present we don’t think they are sufficiently clear.”

Need certainty

Jo Coleman, from IBB Solicitors and a member of the Charity Law Association, told the panel that what was needed most in the sector at the moment “is a period of certainty”.

She said: “There has been a lot of change in the sector and the 950,000 odd charity trustees are expected to be on top of the law and on top of regulation as they go through their daily lives and try and do their very best for the charities. They are of course volunteers and there is a lot of regulation for them to get on top of.”

She went on to say that guidance is very important for the sector, criticising the moving of the Charity Commission’s website to the gov.co.uk provision. She said it is “now incredibly difficult for charities to find the guidance that we know is available”.

Coleman also said that the Charity Law Association had a concern that the Commission would be able to use clause one, the ability to offer official warnings to charity trustees, if it does not like a charity’s stance. She suggested guidance and safeguards should be put into the bill to stop this from happening.

Julian Smith, from Farrer and Co, spoke about a significant misunderstanding present in the public about what the term ‘public benefit’ means, with some people believing it means ‘in the public interest’. He said that guidance on this from the Commission is necessary. He added that in terms of accountability and compliance, he does not believe the bill needs to do more.

Terrorism

Evidence was also given at the committee from David Anderson, an independent reviewer of terrorism legislation, who spoke about problems that can be seen in the example of HSBC cutting ties with several Muslim charities this year.

He stated that banks are inherently “risk adverse”, wanting to distance themselves from any suspect activity in fear of fines. He said that this aversion has been heightened by activities in America, where banks have been fined millions of dollars for their part in terrorist activities.

Bernard Jenkin, Conservative MP for Harwich and North Essex, who is a member of the bill committee but also chair of the Public Administration Select Committee, which scrutinises charity regular, questioned the role of banks in cutting their ties with charities as a risk aversion tactic.

He said: “It is not the job of the banks to regulate the charity sector by withholding banking facilities. That should be the job of the Charity Commission. If the Charity Commission registers a charity that should be a defence.”

He went on to say that if the Charity Commission registers a charity, it “puts upon it a certificate of ok-ness”.

When questioned whether this should be something that is written into the bill, Anderson said that it could be, but “you don’t have to look far to see where charity status has been no guarantee”.