Social Enterprise UK has written to Sara Burgess, regulator of community interest companies, asking for information about “the strength of procedures for protecting and enforcing the asset lock” after receiving complaints from its members that breaches were not being properly investigated.
SEUK, the umbrella body for social enterprises in the UK, told civilsociety.co.uk that some members had “expressed concerns” that assets of CICs which had closed down were not being disbursed for social benefit.
SEUK also said that the number of CICs in the UK had now risen to 9,000, and that the regulator must be “resourced to reflect this growth”.
David Dawes, a member of the SEUK board and founder of Entreprenurses CIC, told he had previously complained to the regulator about a potential breach of the asset lock, but had been told that the regulator would not investigate.
“As far as I know I’ve never heard of the CIC regulator investigating a breach of the asset lock,” he said. “They have a whole range of powers but no one can remember them being used in the case of a breach.
“They’ve misinterpreted light-touch as not getting involved at all.”
Regulatory: 'inaccurate portrayal'
Sara Burgess, the CIC regulator, said that she did not feel this portrayal was accurate.
“As the regulator of community interest companies I take all concerns raised with my office seriously and this includes breaches of the asset lock,” she said. “The assertion that our office has never investigated a breach of the asset lock is not correct. We are unable to comment on any specific questions raised by SEUK.”
John Mulkerrin, chair of the CIC Association, said he did not feel that the CIC regulator was adopting an approach which was too light-touch.
“There are certainly people who feel the CIC regulator is too light-touch,” he said. “But no more than people feel about regulators in other fields.”