There are now more than 37,000 community interest companies (CICs) registered in the UK, none of which are ever investigated by the public body set up to regulate them.
When it was launched in 2005, the CIC Regulator was intended to be a “light-touch” watchdog, focused primarily on registering social enterprises as CICs.
It has succeeded in that primary aim, as thousands of businesses have passed the regulator’s “community interest test” and registered as CICs, with an “asset lock” in place to ensure their assets and profits are used for the community’s benefit.
But as numbers of CICs have steadily increased over the past two decades, so have suggestions that they might be better served by a regulator with the profile and resources to investigate potential wrongdoing thoroughly.
In recent years, media reports of bad actors have seen some CICs punished for rule breaches, but not by the regulator set up to monitor them specifically.
It is concerning, therefore, that rather than bolstering its resources and powers, the government seems keen to merge the CIC Regulator into Companies House as part of a red tape-cutting drive.
Powers and action
The CIC Regulator is one person – Andy King, primarily Companies House chief executive – supported by nine of his colleagues.
Its part-time team, based alongside Companies House staff in Cardiff, had an income of £474,000 to work with last year, mainly from registration fees.
This is around 1% of the Charity Commission’s annual budget from government, which has just risen to £37.9m, and oversees more than 170,000 charities in England and Wales.
Nevertheless, the CIC Regulator has crucial powers to investigate complaints about its registrants, but in practice it does not use them.
Its latest accounts read: “In the year 2024-25, our office received 36 new complaints about CICs, which is a slight increase on the number of complaints received in the previous year. This year, the regulator did not need to use her statutory powers to launch a formal investigation into any CICs.”
Previous annual reports similarly state that the regulator did not investigate any of the tens of thousands of CICs on its register. When asked about individual CICs, the regulator replies that it is unable to confirm or deny whether any are under investigation.
This inaction and lack of transparency has prompted criticism over the years with former Social Enterprise UK (SEUK) board member David Dawes once saying the regulator had “misinterpreted light-touch as not getting involved at all”.
Speaking to Civil Society this month, SEUK chief executive Peter Holbrook said that while most social enterprises are not CICs, he is concerned about their regulator’s resources and transparency.
He said: “CICs have grown massively and investment in the regulation and the oversight of them hasn’t really kept pace at all. In fact, it seems to have shrunk.”
Lack of profile
But perhaps more striking than the lack of investigations is the low number of complaints the regulator receives. Taken at face value, the regulator’s latest accounts suggest that of the 37,000 CICs in the country, less than one in 1,000 did anything to provoke concern from a member of the public.
CICs have been criticised by other statutory bodies in recent years, including youth organisation Inside Success Union, which was prosecuted for unlicensed street collections and received a fine. Armed forces CIC We R Blighty’s directors were also fined recently after pleading guilty to multiple offences of collecting money without the required licences.
Last month, Pride in London sacked its former CEO Christopher Joell-Deshields as its leaders faced questions over the CIC’s governance, finance and workplace culture.
And this month, the Fundraising Regulator (FR) confirmed it was investigating Homeless in Need UK CIC, after concerns were raised in a London Centric piece about its public collections.
In its most recent annual report, the FR reported that it received 73 complaints within its remit about CICs in the year to August 2025, more than double the amount the CIC Regulator itself received. The Charity Commission also occasionally receives concerns from people who have mistaken a CIC for a charity.
It therefore seems more likely that the CIC Regulator does not receive many complaints because the general public does not know it exists.
Risk to the sector
But is the CIC Regulator’s limited resource, low profile and hands-off approach really a problem? After all, you could argue that as CICs do not receive the same tax benefits as charities, such as the ability to claim gift aid, there is less of a public interest in their regulation.
One problem is that some members of the public are unlikely to tell the difference between CICs, other social enterprises and even registered charities.
In fact, national media outlets frequently refer to CICs as charities, perhaps wrongly perceiving the difference as semantic.
The FR in recent years has highlighted the potential problems this confusion causes. Its chair Lord Harris said in parliament in 2024 that the community interest company phrase “makes the organisations concerned sound like charities” but without the same laws or level of regulation applying.
Earlier this year, FR chief executive Gerald Oppenheim said: “A small minority [of CICs] appear to be taking advantage of the looser regulatory standards to which they are subject to engage in poor fundraising practice that erodes public trust and damages charities. It also clearly shows the need for stronger regulation.”
Meanwhile, SEUK boss Holbrook said: “Credible regulation and enforcement is in the interests of the sector, the public, all genuine social enterprises. And the trust with the public is, of course, really important.”
A changing approach
There is little information about what the government’s plans to merge the CIC Regulator with Companies House will entail. The regulator last year said it was “business as usual”. The government has not detailed specifics either but said it aims to “remove duplication and streamline processes” in an attempt to boost economic growth. Whatever happens, it seems unlikely that the regulation of CICs will become more robust as a result.
But it is also important to note that current CIC Regulator (and Companies House CEO) King was only appointed in February and could well take a different approach to his predecessor, Louise Smyth.
A change in tone seems to have already taken place in recent years under Smyth. The CIC Regulator’s 2022-23 report read that it was “delighted at the fact that regulator did not need to use her powers to investigate any of the 28,878 CICs on the public register which is a fantastic achievement”.
Subsequent reports have not expressed such glee, opting for a more neutral description possibly due to concerns about this being raised by Harris and others.
However, like his predecessor, King will be limited by the watchdog’s frugal resources and – perhaps even more significantly – his need to focus on his day job overseeing the more than five million businesses on Companies House’s register.
The numbers of CICs nearing 40,000 and confusion rising over their distinction from registered charities surely merits a bolstering of their regulation.
It would be in the interest of CICs, charities and the general public, if the government invested more in their regulation and resisted any pressure to water it down further in the name of economic growth.
