OG117-2 Investigations Work - Considering Cases in a Regulatory Framework

Last reviewed:
Last updated:
23 November 2015

Policy Statement/Overview

IMPORTANT NOTE

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Summary of the guidance

This guidance looks at how the Commission's structure is set up to fulfill our regulatory role

Casework Guidance

Please read the IMPORTANT NOTE on the front page

OG117 A2 - 14 March 2012

OG117 A2 Considering Cases in a Regulatory Framework

1. What our regulatory work involves

Underlying our approach for our regulatory work is our aim of protecting the public's interest in charities thereby increasing public trust and confidence and ensuring compliance with other legal obligations.

Our statutory responsibilities allow us to investigate issues that pose a significant risk to charities and check abuse. Abuse is misconduct or mismanagement in the administration of a charity. The words 'misconduct' and 'mismanagement' should be interpreted as they are commonly understood. This premise is supported by case law – see Scargill v Charity Commissioner and Attorney General, unreported, 4 September 1998.

Misconduct includes any act (or failure to act) in the administration of the charity which the person committing it knew (or ought to have known) was criminal, unlawful or improper.

Mismanagement includes any act (or failure to act) in the administration of the charity that may result in charitable resources being misused or the people who benefit from the charity being put at risk.

Obviously concerns of abuse are always taken seriously but the level of our response will be proportionate; determined by the risk factors attached to the specific circumstances of the case as required by the Commission's Risk Framework.

As a civil regulator, we work to civil law standards of proof; namely a balance of probabilities. in carrying out our investigation work the courts have considered the standard of proof required for use of our powers in line with our statutory responsibility to investigate and check abuse. The threshold that applies, as set out by the court, is that the Commission needs to be satisfied on the facts that there are sufficiently serious and substantial grounds that make it necessary or desirable to act. However, when deciding to act during an investigation to protect charity the courts have made clear that we need not have reached our final conclusions on the facts: this is set out in Seray-Wurle v The Charity Commission and The Attorney General [2008]EWHC 435(Ch)

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2. How we respond to issues of concern

We need to be able to respond to the concerns raised in cases in a variety of ways, depending on the risks involved.

The initial point of contact for most enquiries or complaints to us will be via First Contact, which is the area of the Commission responsible for taking initial telephone calls and receiving emails and correspondence. Initial vetting will identify whether complaints would be dealt with more appropriately by another regulator or if an issue might be cleared up immediately by directing the complainant to other published information.

Cases that are known to require action beyond that of First Contact will be passed to other Commission business areas depending on the nature of what is required. This will include cases for regulatory action.

In the most serious cases, where it is clear that a case involves issues that are of significant risk and will have a major impact on a charity or the public's confidence in charities, we will send the case to Investigations, Monitoring and Enforcement for a pre-inquiry assessment to consider whether a statutory inquiry is required.

Other cases which identify regulatory concerns will usually be examined further in the Commission's Operational areas. A risk assessment will be carried out in line with our Risk Framework to ensure that the way we take the case forward is appropriate to the issues identified. This may include cases where the trustees are willing to work with us to find solutions despite the seriousness of the issues. Certain cases falling into this category may require us to use our information gathering powers under section 52 of the Act. These broader information gathering powers are available to us and can be exercised even where a statutory inquiry has not been opened.

Our Risk Framework sets out the criteria we use to determine whether we should open a statutory inquiry, and where we are likely to use temporary and/or permanent powers contained in sections 46, 47, 52,76, 80 and 81 and of the Act. Use of our regulatory powers is considered in parts OG117-6 to OG117-10 of this guidance series.

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3. Those who may be subject to our regulatory action

Parts OG117-7 to OG117-10 of this guidance series highlight the temporary and permanent protective powers at our disposal under section 76 of the Act. Some of those powers are exercised in relation to a "trustee, charity trustee, officer, agent or employee" of a charity.

Trustee or Charity Trustee

"Charity trustees" are defined in s.177(1) of the Act as those persons having the general control and management of the administration of the charity. By contrast a "trustee" may have less extensive responsibilities, for example, simply to hold legal title to the charity's property (as a "holding trustee" or "custodian trustee"). In this guidance, however, the word "trustee" is used to refer to the charity trustees. Other sorts of trustee are identified as appropriate. Before we exercise powers against a trustee we must be reasonably satisfied that he or she holds that office. If we are of the view that someone is not a properly appointed trustee, we cannot exercise a power to suspend them, for example, because we cannot suspend someone from an office they do not hold. However, we cannot determine whether or not someone holds a particular office (as the Court can).

It follows that, depending on the circumstances, we may be able to exercise our powers against an individual who claims to be a trustee where there appears to be a legal basis to that claim even if his or her claim is disputed by others.

In situations of doubt we may need to consider exercising our powers in relation to a person as an agent or officer of the charity, as well as in their supposed capacity as trustee. This ensures that if the person turns out not to be a trustee he or she will still be caught by our Order by virtue of the position he or she holds.

lawyer_refer

Legal advice must be sought where it is unclear what position an individual holds in a charity.

Officer

An officer of a charity is anyone who holds an office, for example a secretary or a treasurer. Often, they will also be trustees but there are situations where certain officers are not trustees. This can usually be determined by reading the charity's governing document, but where doubts arise you must seek advice from a legal officer.

Employee

An employee is someone having a contract of employment with the charity which is usually in writing. Someone who is paid to carry out regular work for a charity is likely to be an employee. Charities have to pay National Insurance contributions and make PAYE tax deductions for employees.

Charities may also use the services of self-employed contractors. However, these will not be employees of the charity. Self-employed contractors usually act for a specified period of time and payment is often upon completion of a task rather than an hourly rate. Self employed contractors have to make arrangements to pay their own tax. Titles for contracted staff may be misleading as sometimes their work may be referred to as "employment". However, it is the relationship with the charity that is important rather than the job title. If there is any uncertainty as to the capacity in which an individual is working, then legal advice must be taken.

Agent

In law an agent is someone who has the authority to legally bind the principal, for example, in a contract. In this situation the charity (or charity trustees) will be the principal. In casework terms we would be looking at what authority the individual has to bind the charity. An example may be a volunteer who has the power to open a bank account on behalf of a charity and sign the bank mandate. This volunteer is acting as an agent of the charity in doing so.

lawyer_referLegal advice must be sought where you are of the view that a volunteer may be an agent or you are otherwise considering taking regulatory action against a volunteer.

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4. Confidentiality

External sources may provide information about suspected causes for concern on the understanding that the Commission will not disclose their identity. Whilst we will respect such confidences as far as we can we cannot absolutely guarantee confidentiality since, ultimately, a Court may be persuaded to order us to reveal the identity of our informant. Identities will not be disclosed as a matter of course but we will need to be able to disclose the nature of the complaint if we are to investigate it properly. Requests to disclose identity will be considered under the legal principles applicable to data protection, human rights, freedom of information and whistleblowing. Guidance on these issues is available as follows:

      • OG 71 on The Human Rights Act 1998.
      • OG 407 considers the Whistleblowing provisions contained in the Public Interest Disclosure Act 1998.
      • OG117-1 also sets out how human rights issues may be engaged during the course of our investigatory work.
      • OG117-5 sets out our publishing policy on issuing press releases when we produce a Statement of Results of Inquiry.
      • OG 405 Sharing information with other public authorities under section 10.

Serious incident reporting guidance explains about the confidentiality of information provided under the serious incident reporting regime.

More information on the Freedom of Information Act 2000 for those working in central government departments can be found on the Ministry of Justice website and the Information Commissioner's website.

Information held for the purposes of conducting a statutory inquiry is likely to be subject to an absolute exemption on the need to disclose it under section 32 of this Act. Where information falls within one the exemptions, it is not disclosable under the freedom of information legislation. However, it may be possible to disclose information under one or other of our own statutory powers. It is important to bear in mind that the Freedom of Information Act protects individual officers (and the Commission) by providing authority for the disclosure of information. The Act provides no authority for disclosing exempt information. To disclose information without authority may be problematic and legal advice must be sought before doing so.

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5. Requests for charity proceedings

lawyer_referIf, in the course of a statutory inquiry case a request is made for authority to bring charity proceedings under section 115 of the Act, then the request must be dealt with by a Legal Officer.

In the absence of special reasons the Commission is bound to refuse section 115 authority in any case where it can deal with the case itself using its own powers.

In deciding whether or not to give consent the Legal Officer is likely to need to discuss with the investigating officer the strategy for the case and whether any powers may be used that will deal with the matter in dispute.

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