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

Last reviewed:
14 December 2018
Last updated:
28 December 2018

Policy Statement/Overview

IMPORTANT NOTE

  • This guidance was reviewed and updated on 14 December 2018. 
  • The Casework Guidance tab contains all the text for this OG; you may find it easier to navigate using the OG Contents tab. The other tabs are empty. 

Summary of the guidance

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

Casework Guidance  

OG117-2 Considering Cases in a Regulatory Framework

OG117-2 14 December 2018

1. The purpose of our regulatory work

The Charity Commission’s purpose is to ensure that charity can thrive and inspire trust, so that people can improve lives and strengthen society. This underpins our approach to all our regulatory work. We hold charities to account and increase public trust and confidence in them.

We act to protect charities from abuse and mismanagement and to ensure that trustees comply with their legal obligations, and that they do so in the way that the public rightly expects. We prioritise our resources where our intervention will have the most impact, and we place an increasing emphasis on preventing problems through our proactive work to identify and address problems in charities.

We decide if an issue is within our regulatory remit by first considering whether it falls within our statutory objectives and functions. If we decide that we do have a regulatory role, we consider the appropriate engagement based on our assessment of the nature and level of risk as set out in our Regulatory and Risk Framework. This explains how we approach all of our work and helps ensure that we are proportionate, accountable, consistent, transparent and targeted

Based on our assessment of the nature and level of risk, we will consider the most effective and proportionate way of resolving the issue, and the priority that we should give it. We will also take account of factors such as what external guidance already exists, whether our involvement will have a significant impact on resolving the issue, the resource implications for the Commission and the charity and the likely result of our not acting.

We have a general statutory function to identify and investigate apparent misconduct and/ or mismanagement in the administration of charities and to take remedial or protective action.

Misconduct includes any act (or failure to act) that the person committing it knew (or ought to have known) was criminal, unlawful or improper.

Mismanagement includes any act (or failure to act) that may cause charitable resources to be misused or the people who benefit from the charity to be put at risk.

In addition the Charities Act 2011 (‘the Act’) makes clear that failure to comply in full and within the deadline with any Commission Direction or Order may in itself be regarded as misconduct and/ or mismanagement in the administration of the charity.

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 a statutory inquiry 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 respond to concerns about charities 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 our Risk Assessment Unit (‘RAU’), initial vetting will identify whether complaints would be dealt with more appropriately by another regulator or if an issue might be resolved immediately by directing the complainant to published information.

Cases that are determined to require action beyond that of the RAU 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, the RAU will discuss with Investigations, Monitoring and Enforcement (‘IME’) whether the case appears to meet the threshold for opening a statutory inquiry and if so, the RAU will submit a formal referral.

Other cases which identify regulatory concerns will usually be examined further in the Commission's Regulatory Compliance teams. 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 powers are available to us and can be exercised even where a statutory inquiry has not been opened. If after further engagement with the issues, it is then considered that the inquiry threshold has been met, a referral will be made to IME for assessment.

Further information about when we open a statutory inquiry is contained within OG117-3. Information about the use of our temporary and/or permanent powers contained in sections 46, 47, 52,76, 80, 81, and 84B the Act are considered in OG117-6 to OG117-11. Additionally, OG404 (s75A Official Warnings) and OG525 (s181A Power to Disqualify) are relevant to inquiry work.

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3. Those who may be subject to our regulatory action

Parts OG117-7 to OG117-11 of this guidance series highlight the temporary and permanent protective powers under sections 76 and 84B 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.

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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.

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Legal 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 we cannot guarantee confidentiality since, ultimately, a Court may order us to reveal the identity of our informant. While we will not disclose identities as a matter of course, we are likely to need to disclose the nature of the complaint if we are to investigate it properly. In certain circumstances we may disclose personal, sensitive and/or confidential information provided to us, but we will always treat and handle information in accordance with the law. You can find more information about how the Commission uses personal data, when we further disclose information, and how we fulfil our obligations under the General Data Protection Regulation and the Data Protection Act 2018 in our Personal Information Charter.

Requests to disclose identity will be considered under the legal principles applicable to data protection, human rights, freedom of information and whistleblowing. Operational 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.

More information on the Freedom of Information Act 2000 for those working in central government departments can be found on GOV.UK 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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