APPENDIX 2
Copy of a letter and a memorandum submitted
by The Association for Charities
ASSOCIATION SUBMISSION
FOR THE
COMMITTEE'S
MEETING ON
28 NOVEMBER 2001
Thank you for your letter of 25 October indicating
the Committee's willingness to receive submissions on matters
under consideration. I now enclose the Association's submission
for the Committee's meeting on 28 November 2001, and should be
grateful if you would circulate it to the Committee Members.
Whilst our submission concentrates chiefly on
the NAO report findings on the Commission's performance in the
area of investigations (Report, Part 2), it also relates these
to Association evidence from some 20 charities with direct experience
of the Commission's investigatory performance since 1994. Given
the need for a brief submission, however, the back-up evidence
for Association statements does not accompany the submission:
the dossier of such evidence can, however, be made available to
the Committee, or any Member, on request. Our submission also
refers to an August 2001 report from the Independent Complaints
Reviewer, which is also available, upon request. This report was
copied to the writer by a complainant (who is not an Association
member) with permission to release it to any interested party.
Association for Charities: A National
Association for the Support and Protection of Charity Beneficiaries,
Trustees, Volunteers and Donors
POWER WITHOUT EFFECTIVE ACCOUNTABILITY: CHARITY
COMMISSION INVESTIGATIONS AND EXERCISE OF JUDICIAL POWERS
1. INTRODUCTION
A welcome for the NAO Report HC 234 and its
consideration by the Public Accounts Committee.
1.1 Given the importance to our national
life and economy of this major, but generally under-regarded sector,
the Association for Charities (AfC) welcomes the National Audit
Office (NAO) report on the regulatory role of the Charity Commission
(the Commission); and the Public Accounts Committee's (PAC) early
consideration of it. The Association also welcomes the opportunity
to present this submission to the Committee.
1.2 The Association hopes that the PAC's
report, together with that from the Cabinet Office's Performance
and Innovation Unit (PIU) expected early next year, will lead
the Government and Parliament to undertake the fundamental and
much-needed review of the sector; and, in particular, a review
of the legal and regulatory framework, and the regulatory role
of the Commission.
The Association for Charities
1.3 The PAC may recall that trustees of
certain charities made submissions on the last occasion the Committee
reported on the NAO's Report, Charity Commission: Regulation
and Support of Charities (HC2, Session 1997-98). These submissions
raised concerns stemming from trustees' experiences of the Commission's
exercise of its regulatory powers. One such case was raised at
the Committee by a Member, in the private session, as reported
in the Committee's Twenty eighth Report of April 1998. That case
led to an application for judicial review in the High Court; another
led to trustee appeals against Commission Orders which resulted
in a landmark judgement and other developments outlined in Section
2 of this submission, and to the formation, in 1999, of the Association
for Charities.
1.4 The Association's area of concern, operation
and activity is the regulatory framework for the charity and voluntary
sector, with particular reference to the regulatory role of the
Commission, and the manner in which the Commission has exercised
the unparalleled regulatory and judicial powers conferred by the
Charities Act 1993.
1.5 The Association is not attached to any
political party or any other organisation or body. It is wholly
independent, although it seeks to co-operate with other bodies
which share its objects and concerns; and it supports the attempts
of the present Chief Commissioner to change the culture and improve
the performance of the Commission in its regulatory role. It is
almost entirely financed by its core membership, who, in the best
traditions of the voluntary sector, give generously of their time,
expertise and other resources without charge.
1.6 The AfC has, since 1999, received and
collated information and evidence from trustees and supporters
of some 20 charities. This evidence demonstrates the improper,
and on occasion unlawful, exercise of the Commissioners' regulatory
powers by Commission officers. Such conduct has led to unnecessary
and extensive damage to beneficiaries (both human and animal);
to charities; and to trustees who had served with integrity, competence
and whole-hearted commitment. [Note: The Association's first video
"With Charity for All?" refers to some of the effects
of the exercise of the Commission's regulatory powers on four
charities.
Layout of the Submission
1.7 Following this brief introduction, the
submission is divided into three further sections. Section 2 outlines
important developments relating to the Commission's accountability
to the Courts; Section 3 deals with the NAO Report's findings
(particularly in relation to Part 2 of the NAO Report which is
the area of the Association's focus) and relates these to the
evidence obtained by the Association from 20 charities; and Section
4 draws the Committee's attention to the lessons the AfC believes
may be drawn from the matters outlined in Sections 2 and 3 of
the Submission.
2. DEVELOPMENTS
SINCE THE
PAC'S 1998 REPORT
RELATING TO
THE ACCOUNTABILITY
OF THE
COMMISSION TO
THE COURTS
2.1 As the NAO Report notes, the Commission
is a non-ministerial Government department accountable to the
Courts for its decisions (Report 1.4). In truth, the Commission's
regulatory powers "are in their nature judicial powers: they
are the sort of powers the Court exercises" [Ref: The
Law and Practice relating to the Charities—Hubert Picarda
QC, 1999]. No Minister, Government, nor even Parliament can at
present review the Commission's regulatory decisions: only the
High Court (and the Court of Appeal/House of Lords) could do so
if they so determine. The Courts provide the only (theoretical)
safeguard against any abuse of the Commissioners' regulatory powers.
2.2 Under present arrangements, trustees
seeking to appeal against Commission Orders require the Commission's
permission to bring appeals; cannot, as trustees, obtain legal
aid whatever their circumstances; and the Commission need not
appear as a defendant to seek to support or justify their Orders.
Any trustee seeking to complain to an MP, Minister, or the Parliamentary
Ombudsman about the use of the Commission's judicial powers is
informed that these are matters for the High Court alone.
Why in practice the only safeguard against Commission
abuse of powers may no longer operate
2.3 In landmark charity law appeals (1999
to 2001) trustees appealed against Commission Orders appointing
a Receiver and Manager to make and execute a substantial financial
settlement from charity funds which professional advisers to the
charity had advised the trustees it would be a breach of their
duty of care to do on the available evidence. At a hearing of
these appeals, a High Court Judge ruled (on grounds of time and
cost) that "it would not be right to spend time investigating
what the Charity Commissioners did and what the Charity Commissioners
thought and what the Charity Commissioners said." Consequently,
the Court determined, "considering what factors influenced
the Charity Commissioners, what discussions took place within
the Charity Commission, whether the Charity Commissioners were
fair, whether they were reasonable, whether they might have done
things differently from the way they did could all be avoided".
[Note: The appellant trustees, legally advised, and financed by
one of their number in their Court appeals designed to protect
the charity's assets, had alleged bias and misconduct on the part
of Commission officers in the making of such Orders—but
Counsel for HM Attorney-General, as defendant, argued that the
Court should accept "prima facie expect the Commission
not to be wrong"]. Prior to the Court's ruling, the then
Head of the Home Civil Service had asserted that he would be unable
to consider any allegations of misconduct by Commission officers:
only the High Court could do so.
2.4 The Association's evidence is that Commission
officers, exercising the Commissioner's powers, have acted carelessly,
incompetently, with bias and, on occasion, unlawfully. Powers
of this nature are not generally available to other UK regulatory
bodies without prior reference to the Courts: they were not available
to the Commission until the implementation of the Charities Act
1993.
2.5 The Association believes that the landmark
Court ruling related above—now case law precedent—may
serve to relieve the Commission of the likelihood that any future
decision of theirs will be the subject of Court review. In reality
this Court ruling, the AfC and leading charity lawyers believe,
leaves the Commission effectively unaccountable in the exercise
of its regulatory powers. The AfC claims that such a situation
is inimical to the public interest; and could well be the subject
of concern and possible action by Parliament. The AfC believes
that Lord Acton's dictum (1887) "power tends to corrupt and
absolute power corrupts absolutely" should serve as an appropriate
warning in this situation.
3. THE COMMISSION'S
REGULATORY ROLE
AND PERFORMANCE:
THE NAO REPORT'S
FINDINGS, AN
INDEPENDENT COMPLAINTS
REVIEWER'S
REPORT FINDINGS
AND THE
AFC'S EVIDENCE
3.1 NAO reports by their nature and language
do not appear in dramatic form: they record, in measured form
and language, the objects of a review, the study methodology,
and progress and failings in specific areas. A reader of this
report may too readily conclude that there is no cause for particular
concern, as did the editor of a leading charity news magazine,
who recently commented as follows in her editorial "The Charity
Commissioners must be breathing a sigh of relief. The National
Audit Office's Report that came out last week has given the Commission
a clean bill of health". The AfC suggests that such a reading
of the report fails to appreciate the serious defects and deficiencies
referred to below.
3.2 The Commission has a multiplicity of
roles under present arrangements: registry, supportive, administrative,
and investigatory, followed by the exercise, where chosen, of
judicial regulatory powers. The AfC welcomes the Commission's
progress recorded in three areas by the NAO Report (Report Summary,
1.5).
3.3 Whether a prospective charity achieves
Commission registration which will affect its taxation status
or whether or not a charity is helpfully and effectively supported
by the Commission advice or guidance, is unlikely to cause the
degree and kind of damage to beneficiaries which can, and has
occurred through the exercise of the Commission's judicial powers.
Such damage can include, and has included, possible loss of life
and livelihood, deterioration of health and a lack of safety.
In the area of the AfC's particular concern—investigations
work—there is considerable evidence that serious weaknesses
remain.
Serious weaknesses in investigations work
3.4 The Association notes that Part 2 of
the NAO Report lists a catalogue of substantial defects in the
Investigation Division's performance. Eight years after the Commissioners
were granted probably the most substantial judicial powers granted
to any regulatory agency in the United Kingdom, and four years
after trenchant criticisms of the Commission's investigatory performance
were made by the PAC, the Commission's performance in this area
appears to be inadequate. [Note: the NAO Report records that the
only two Treasury Minute responses in which the Commission is
recorded as not accepting the PAC's conclusions were a lack of
management grip, and the allocation of resources to investigations
work (Report, Appendix 2, pages 17-18). If the Commission could
not accept that such strictures were justified in those areas,
it is perhaps not surprising that serious weaknesses remain.]
3.5 The Commission appears to be completing
investigations more quickly (Report, paragraph 2.6), but this
may be because, as the Association's evidence demonstrates, they
are failing to investigate cases as thoroughly and professionally
as they should—possibly in their drive to achieve target
completions. The same remarks may be relevant to the reported
progress in tackling the backlog of cases (paragraph 2.7). The
Association believes that, as the NAO recommends, it could be
helpful and good management practice for individual cases to be
carefully and properly monitored (paragraph 2.8)—provided
such monitoring did not concentrate exclusively on the need to
meet target investigation completion dates regardless of the quality
of the case officer's performance of the complexity of the case.
3.6 The Commission's failure to consult
trustees about important decisions (Report, page 17, final sentence
of Commentary) is common to the great majority of the cases known
to the Association. Again the AfC notes that the Commission does
not review the cumulative time taken to resolve cases, nor their
cumulative costs (paragraph 2.9); nor does it systematically review
the scope of inquiries before launching an inquiry (paragraph
2.10). Few inquiries include systems checks within charities or
detailed financial examinations (paragraph 2.12).
3.7 The Association notes, with some surprise
(albeit welcome surprise) that certain other regulatory bodies
appear to consider their liaison arrangements with the Commission
are working well. The Association's experience is that, in certain
cases, the Commission failed to inform the Police and the Inland
Revenue, even when requested and reminded by trustees to do so.
3.8 It is clear from the NAO Report (paragraphs
2.16 and 2.17) that the Commission does not always check that
charities have successfully carried out agreed actions aimed at
remedying weaknesses; nor was it possible always to identify clearly
from files what actions a charity was expected to carry out to
rectify weaknesses.
The dangers of purely quantitative targets to
complete investigations
3.9 The Association draws attention to Appendix
3 of the NAO Report in which the Commission reports performance
in 2000-01 against targets they set in relation to three objectives.
Leaving aside the question of whether the particular targets set
by the Commission under objective 3 were sufficiently taxing,
the Association notes that each of the targets on the investigative
side are expressed purely in quantitative terms—with no
reference whatsoever to quality of performance. The Association
claims there is considerable danger that measurements expressed
purely in quantitative terms—particularly in the area of
investigations completed within certain dates—will be likely,
if not virtually certain, to encourage careless, incompetent and
inadequate investigations in order to reach or exceed a target
of investigations completed. In seeking to meet such quantitative
targets, investigations staff are likely to be encouraged to "cut
corners" and bring investigations to an end without taking
full and careful account of the true needs of beneficiaries and
the interests of the charities the Commission should be there
to protect. It is the Association's experience, confirmed also
by the findings in Part 2 of the NAO Report, and an Independent
Complaints Reviewer's recent report (see paragraphs 3.20-3.22
below) that the Investigation Divisions perform very poorly in
the critical area of investigation work.
Complaints and Compliments: inadequate measures
to determine performance or effectiveness
3.10 The Association notes that no proper
complaints procedures (either internal or external) were available
to complainants until January 2000—a possibly unique deficit
in any governmental regulatory body. The AfC believes that it
was no coincidence that, following the landmark charity case outlined
earlier in this Submission and the Association's formation, the
Commission detected a need for pilot internal and external complaints
procedures. The AfC immediately welcomed the introduction of these
pilot procedures by the present Chief Commissioner, and has made
certain proposals to the Commission Board for improvements which
the Chief Commissioner has indicated will be taken into account
when the Board reviews the pilot schemes before the end of this
year.
3.11 From a meeting with the Independent
Complaints Reviewer earlier this year, the AfC was surprised to
learn that the Commission—of its own volition—has
a policy of only keeping certain files on a case for a period
of three months. Apparently, in certain cases where the Commission
decides (do they have a crystal ball?) that a case may become
the subject of complaints, they may keep the files for a longer
period. The AfC believes that such a Commission policy is, frankly,
unacceptable—as well as being out of line with other Government
Departments and Agencies.
3.12 The AfC believes that, for a variety
of reasons, the level of complaints and compliments received by
the Commission cannot properly be used to measure the efficiency
or effectiveness of the manner in which it performs, particularly
in its investigatory role. Firstly, as any senior manager or chief
executive of a public sector organisation appreciates, many people
(possibly the majority?) will not trouble to compliment or complain
to a public sector organisation; they may consider it will not
make any difference—except to lead to exchanges of correspondence
if they were to complain; while others may wish to avoid jeopardising
any future contacts with the organisation by complaining.
3.13 Finally, so far as the Commission is
concerned, several of those who felt most strongly about the poor
performance of the Commission and the damage done to their charities
or themselves by Commission actions, have sought to complain.
Their complaints, however, have not been recognised or dealt with
on a number of grounds—not least that their complaints are
out of time. The Commission has written to members of the Association
who sought to complain about Commission conduct or performance,
saying that "the files are closed" and that no further
reply from them will be forthcoming.
3.14 From paragraph 3.19 of the NAO Report,
we learn that 22 per cent of the 121 complaints to the Commission
in 2000 were upheld: a statistic which may either be considered
as an acknowledgement that about a quarter of the complaints were
justified, indicating a relatively poor initial performance, or
that the Commission's internal complaints procedure is working
satisfactorily, or both. Although the NAO do not seek to relate
the number of complaints or compliments to the Commission's overall
performance, the Association is aware that the Commission themselves
have in the past sought to do so. During the same period, paragraph
3.20 of the NAO Report indicates that the Independent Complaints
Reviewer received 43 complaints, partially upholding one of the
eight formally investigated with two of the eight being outside
the Reviewer's terms of reference. The answer to a recent Parliamentary
Question seeking information on the numbers of complainants and
complaints to the Commission and the Independent Reviewer, with
results, from January 2000 to the present, should be available
in the House of Commons Library by the date of the Committee's
meeting.
The Use of the Commission's Statutory Powers
3.15 The NAO Report notes that the Commission's
use of statutory powers has continued to decline (paragraphs 2.14
to 2.15 and Figure 10) despite the Committee's concerns expressed
in 1998. The Association has consistently supported the proper
and speedy use of statutory powers by the Commission, once the
need for such has been established by thorough and professionally
executed investigations. The Association suspects that the proven
cases of maladministration or abuse amongst registered charities
are likely to under-represent the true position, given:
— the difficulty of obtaining evidence
in this area;
— the relative ease with which fraud
and abuse may occur in relation to the size, monetary value and
fragmentation of the sector;
— the management of such bodies by
trustees and governors, who may in many cases lack the necessary
time, skill and management expertise required; and
— the opportunities for malfeasance
and fraud in this sector allied to the relatively low rates of
detection.
Such conditions might reasonably be expected
to attract those who might seek to take advantage of such opportunities.
The AfC shares the PAC's expressed concerns in their last report
relating to the Commission's "failure to show more drive
in exploiting the opportunities for greater effectiveness which
the 1993 legislation provides" (Report, Appendix 2).
3.16 At the same time, the Association has
extensive evidence of the Commission's misuse of statutory powers,
particularly in relation to small and medium-sized charities,
where the Commission has been too ready to impose its control
by statutory means, rather than investigate and remedy the defects
reported to them by concerned trustees.
3.17 The AfC notes that a seeming paradox
emerges from their review of several of their case files. On the
one hand, the Commission, in these cases, failed to investigate,
either at all or properly, the evidence of maladministration drawn
to their attention, with consequent costs and losses to the charity
in certain cases: on the other hand "whistle-blower"
trustees have experienced the full penalties of the apparently
arbitrary exercise of Commission judicial powers, without any
effective means of appeal or redress.
3.18 A classic case of the Commission's
misuse of statutory powers (one of several) relates to a charity
where trustees obtained an injunction to prevent a Receiver and
Manager making a financial settlement from charity funds which
he had been instructed by Commission Order to execute. The Commission,
having additionally appointed new trustees to take on the management
of the charity from the trustees appealing against their Order,
were later faced with a situation in which the trustees they had
appointed, in time also came to oppose the financial settlement
the Commission had instructed the Receiver to execute. The result
was that the Commission, belatedly, was obliged to support the
new trustees in their opposition to the financial settlement;
and dismiss the Receiver whom they had appointed, at charity expense,
to execute the settlement they sought.
3.19 As a final irony, in the case mentioned
above, the claimant of charity funds, whose claims the Commission
had sought to meet by the appointment of the Receiver, made use
of the Commission's new internal and external complaints procedures
to complain about several aspects of the Commission's conduct.
After securing certain apologies from the Chief Commissioner who
had reviewed his complaints, reference was made to the Independent
Complaints Reviewer. Of the 12 complaints the Independent Reviewer
considered, she partially or fully upheld six.
3.20 In her August 2001 report on that case,
the Independent Reviewer reached the following conclusion:
"At the end of the review, I am led to conclude
that overall this case was very poorly handled. It has been characterised
by changes in approach and direction and the Commission has tried
almost every possible intervention in order to achieve a solution
to the problems that were being faced. Its active intervention
has lasted literally for years and the issue of the loans has
still not been resolved. It is difficult to see how this can be
a reasonable use of public money."
In the Association's view, such a finding could
apply to other cases on its files.
3.21 At the conclusion of the same report,
the Independent Reviewer made seven recommendations, the first
two of which were recommendations that the Commission offered
the complainant an apology for the shortcomings identified in
that report which were not the subject of an earlier apology following
the Chief Commissioner's review; and a recommendation that the
Commission offer a consolatory payment to the complainant, or
if they preferred, the recommended sum could be paid directly
to a charity of the complainant's choice. The remaining five recommendations
related to failures in the Commission's handling of the case,
with the final recommendation that the Commission use the lessons
of that report to inform future practice and procedure.
The need for swift and decisive Commission action
to deal effectively with the serious continuing weaknesses in
investigations work which have led to the misuse of judicial powers
3.22 The AfC believes that it is now clear
from the considerable evidence of the NAO Reports, the Independent
Reviewer's Report from which a quotation appears in paragraph
3.21 above, and from the AfC's dossier of some 20 cases, the time
has now come for swift and decisive Commission action—and
before any further unnecessary damage occurs to beneficiaries,
charities and trustees. The AfC believes that such management
action will need to be taken in relation to the two related areas
of inadequate investigatory performance, and the resultant misuse
of the Commission's judicial powers. The extra million pounds
noted in the NAO Report to be allocated to investigations work
may otherwise be wasted; and used to perpetuate a failing (and
failed) area of activity.
3.23 With regard to the continuing investigatory
work failures, the AfC considers that a root-and-branch reform
will be required. It would be inexcusable were the next NAO report
to have to point to investigation failures again—while in
the meantime more beneficiaries, charities and trustees were being
failed.
3.24 Firstly, it is the AfC's considered
view that the Heads of Investigations in the three Commission
offices should be stood down, and replaced by Investigative Service
Managers of proven competence, who are used to demanding, and
obtaining the highest standards of investigatory performance.
Such managers, the AfC believes could be recruited, either on
a temporary or permanent basis from established regulatory agencies
with a record of investigative competence, including the NAO,
the Audit Commission and the Police Service. Such appointments
could be expected to secure the requisite improvements in staff
training, mentoring, procedural improvements and effective monitoring,
to gain full value from the additional £1 million (a 31 per
cent increase) proposed for investigatory work.
3.25 Secondly, given the damage to the lives,
livelihood, heath and safety of those affected by the exercise
of such powers, the AfC considers that in every case where the
use of such powers is under consideration, the Commission Board
should, upon a report, determine what exercise, if any, of its
judicial powers would be requisite. By this means, the AfC believes,
confidence in the integrity of charity, and of the Commission's
exercise of its judicial powers will be increased; and the Court's
assumptions that it was the Commissioners (and not the Commission
officers) who were so acting, would be validated. [Note: the 1993
Act grants judicial powers to the Commissioners.]
3.26 The Association believes that the action
proposed to secure investigations of the requisite quality, together
with the accountability resulting from the Commission Board's
consideration of every proposed use of judicial powers, should
serve to protect beneficiaries; encourage the greater and proper
use of the Commissioners' statutory powers; and make the most
effective, efficient and economical use of the public funds allocated
to this function.
4. A FRESH LOOK
AT A
LEGAL AND
REGULATORY FRAMEWORK
FOR CHARITIES
AND THE
VOLUNTARY SECTION
4.1 The NAO Report reviewed issues relating
to the economy, efficiency and effectiveness of how the Commission
has performed in its present regulatory role. It did not set out
to address the more fundamental and wider-ranging issue of what
changes might be appropriate to "enable the existing and
new not-for-profit organisations to thrive and grow; to encourage
the development of new types of organisation; and to ensure public
confidence in the sector"—so as to "help to secure
a strong, independent and diverse sector, capable both of challenging
Government and working with it where appropriate". These
are the stated aims of the current PIU review.
4.2 The AfC, together with many other organisations
with an interest in the health and development of this sector,
will be making a submission to the PIU. It will be neither appropriate
nor necessary, in this submission to the PAC, to attempt to cover
the same ground as will be covered in the PIU submission.
4.3 At the same time, the AfC welcomes the
PIU's recognition that "there are growing public demands
for greater openness and accountability". [PIU statement
Modernising the Legal and Regulatory Framework for Charities
and the Voluntary Sector—the Case for Further Reform].
One of the three key objectives of the Commission is "to
improve the governance, accountability, efficiency and effectiveness
of charities" (NAO Report 1.5). The AfC believes that "Physician
heal thyself" (St Luke 4, 23) has a particular force for
the Commission. How can the Commission be expected to improve
the governance, accountability, efficiency and effectiveness of
charities until it puts its "own house" in order by
performing effectively and with integrity in its investigatory
role and the exercise of its judicial powers?
4.4 The Commission's effective lack of accountability
for its decisions—particularly give the decision of the
Courts that they would not review Commission conduct or decisions
in appeals against Commission Orders—makes it difficult
to envisage the likelihood of further trustee appeals, or of the
chances of success were any such appeals to be made to the Courts.
Given the already formidable obstacles facing any trustee attempting
to challenge Commission Orders, the AfC claims that the necessity
for appeals to go before the High Court needs to be subject to
review and alteration.
4.5 The AfC draws attention to arrangements
in force in other fields of regulation: even where regulatory
agencies do not have the substantial judicial powers of the Commissioners—and
where appellants are not faced with the virtually insuperable
obstacles in bringing appeals. The Association questions why it
should be necessary for appeals against Commission conduct, decisions
and Orders to be dealt with by the High Court alone, when elsewhere
appellants can appear before independent tribunals, or seek alternative
dispute resolution without reference to the Courts.
4.6 Appeals to an independent tribunal could
remove the virtually insuperable obstacles facing an appellant;
and achieve an outcome in a greater reduced timeframe, and with
greatly reduced costs to all parties. [Note: The present "High
Court only" appeals can result, and have resulted in costs
of over £200,000 and extend over a period of some four years.
While such appeals provide substantial fees for the lawyers representing
the parties, it is difficult to see what benefits they provide
for charities and trustees.]
4.7 In summary, the AfC believes that the
present appeals arrangements are characterised by the following
defects. They are:
— unparalleled: the Commission
possesses relatively greater powers, without recourse to the Courts,
than the Police. In no other area of activity known to the Association
is it possible for decisions, involving those relating to the
life, health and safety of people and animals (in respect of charity
beneficiaries), to be made by a small and poorly-performing public
service organisation (in the field of investigations). The Commission
also acts as prosecutor, judge, jury and executioner in relation
to the removal of charity trustees without there being any viable
means of appeal against such decisions;
— unaccountable: Commission
officers and the Commissioners appear to be unaccountable for
their decisions—except to the High Court—which has
declined to consider either their conduct or the circumstances
in which they reached such decisions;
— unsatisfactory: the present
arrangements fail to provide any effective safeguard to ensure
that the Commission exercises its regulatory powers competently,
fairly and in the interests of the charities it regulates;
— unsuited: the present arrangements
appear unsuited to the proper requirements of a regulatory system;
or to the needs of charities, trustees, beneficiaries, volunteers,
charity workers and supporters to be served;
— unlawful (possibly): under
the European Human Rights legislation and the Human Rights Act
1998, it is highly doubtful if a trustee, removed by Commission
Order, could obtain a fair and proper hearing from the Commission
acting as prosecutor, judge, jury and executioner;
— uneconomic: High Court and
Court of Appeal hearings against Commission Orders are extremely
costly:
— to the public purse: through
the preparation for Court appeals by the Commission, Treasury
Solicitor and Attorney-General, with the possibility that certain
adverse Court costs may be borne by the public purse;
— to trustees: if their
appeals against Commission Orders fail and they have all costs
awarded against them;
— to charities: if no Receiver
is in post and charity funds are used for the appeals; or if Court
costs are awarded against the charity;
— unnecessary: the present regulatory
arrangements are unnecessary because there are other well-established
and well-tried methods of regulation and appeal which are far
less complicated, less time-consuming and less costly to all concerned.
4.8 The AfC believes that it is possible,
desirable and indeed, essential for the present legal and regulatory
framework for charities and the voluntary sector to be reviewed;
and for a framework to be designed from first principles to avoid
the defects and deficiencies of the current arrangements. The
AfC trusts that the PIU, the Government and Parliament, with the
support of the Committee, will address this issue.
Mr John Weth
Chairman
The Association for Charities
November 2001
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