legal update for trustees

#TRUSTEECONF2014

AM1: Legal update for trustees

Christine Rigby, BWB

Nick Mott, Charity Commission

NCVO/BWB Trustee Conference 2014

Legal update for trustees

Christine Rigby, BWB10th November 2014

1. Developments in the last year:

• The Charity Commission

• Recent charity cases

• Changes to charity investment powers

• Lobbying and campaigning

• Data protection and consumer law

2. Update on developments in the last few years

• CIOs

• Public Services (Social Value) Act 2010

• Scotland, NI and Republic of Ireland

3. Looking ahead ……

What we will look at

1. Charity Commission

• Our experience: longer response times

• Commission’s stated areas of particular concern: fraud, terrorism, safeguarding and “improper politicisation”

• Step up in regulatory action combined with increased reporting:

• Inquiry reports

• Operational compliance reports

• Confidentiality of information provided to the Commission

– Kennedy –v- Charity Commission

• Over 20 new cases to the First Tier Tribunal (Charity)

– Several challenges to Charity Commission statutory inquiries

– Several challenges to registration refusals eg Human Dignity Trust

• First few appeals to the Upper Tribunal

– John Nicholson

– Regentford

• Several high profile High Court cases too:

– Charity Giving/Dove Trust

– R -v- Hodkin

1. Recent charity cases

1. Changes to charity investment powers

• Trusts (Capital and Income) Act 2013

– In force since January 2014

– Introduces statutory power to adopt “total return” approach to investing permanent endowment

– Compliance with Charity Commission regulations and accompanying guidance

• Law Commission proposals: statutory power for charity trustees to carry out social (or mixed purpose) investments

– Law Commission confirmed its view that many charities already have power to carry out social investment

– Recommendation to put beyond doubt by introducing a statutory power

– Will require legislation – so not for a while!

1. Changes to lobbying and campaigning

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014

• Expenditure which can “reasonably be regarded as intended” to promote or oppose the electoral success of a party, candidate or group of candidates, or to enhance their standing = “controlled expenditure”

• Includes staff costs

• Registration with the Electoral Commission:

– £20,000 in England

– £10,000 in Wales, Scotland or Northern Ireland

• Maximum limits

– £310,800 in England: £55,400 in Scotland; £44,000 in Wales; £30,800 in Northern Ireland

– £9,750 targeted at specific constituency

.1 Lobbying and campaigning

Don’t forget the basics:

• Compliance with Charity Commission guidance on campaigning generally – CC9

– Campaign strategies to have board approval

– Compliance with joint Electoral Commission/Charity Commission guidance on the Lobbying Act

– Company law

• Resolution of members must authorise political donations of over £5,000 and political expenditure at any level

1. Data protection developments

• No special treatment for charities - the last two

years have seen two substantial fines for charities:

– Norwood Ravenswood Ltd £70,000

– British Pregnancy Advisory Service £200,000

• Must keep data secure - lots of guidance on

Information Commissioner’s website

• Use of data protection legislation to stifle investigations

– Global Witness case

• EU developments expected in 2017

1. Consumer law changes

• New requirements introduced in June 2014

• The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

• Apply to all consumer sales – in shops, online, by phone, anywhere else!

• For online sales:

• Banning of pre-ticked donation boxes

• New website requirements for payment buttons

•For all sales:

– New requirements to notify of cancellation rights

– New requirements re returns/refunds

2. CIOs – nearly two years on

• Charitable Incorporated Organisation – new charity legal form available since January 2013

• No registration threshold

• Oct 2014 - just over 2600 CIOs

• Charitable companies should be able

to convert in 2015

• Emerging themes

– Ease of registration

– Register of charges

– Flexibility for membership charities

– Insolvency

2. Public Services (Social Value) Act 2010

• In force since 31 January 2013

• Obliges public authorities, before commencing a procurement process, to consider

“how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and how, in conducting the process of procurement, it might act with a view to securing that improvement”.

• Recent moves to share knowhow and good practice around the Act’s impact on commissioning

• September 2014 - Government announced a review of the Act.

• Further changes to procurement likely due to changes coming from Europe.

• Scotland

– Office of the Scottish Charity Regulator (OSCR)

– Recent consultation on shortened annual return for English charities registered with OSCR.

– Don’t forget requirements to get prior OSCR consent for certain changes

• Northern Ireland

– Charity Commission for Northern Ireland (CCNI)

– English charities operating in NI expected to be called forward for registration in 2015/2016

• Republic of Ireland

– Charities Regulatory Authority (CRA)

– Opened 16th October 2014

– Registration of English charities expected in 2015

2. Looking cross-border

3. Looking ahead…..

Charity law reform

• Law Commission project – consultation expected February 2015

• Reducing duplication for charitable companies – delayed because of cost issues

• Self regulation of fundraising

– PwC report published

– Further Government review in 2017

Company law reform

• Small Business, Enterprise and Employment Bill

Thank you

Any Questions?

Christine Rigby

Bates Wells Braithwaite2-6 Cannon StreetLondon EC4M 6YH

Tel: 020 7551 7712Email: c.rigby@bwbllp.com

Web: www.bwbllp.com

What’s new in charity regulation

Nick Mott & Neal Green

Policy Team

NCVO / BWB Trustee Conference 10 November 2014

Charity regulation – what’s changing and why?

• Trust and confidence still good BUT can’t be taken for granted

• As regulator, we want to:– Help trustees by more clearly explaining their role

and what we expect of them– Protect charities more effectively against abuse– Give the public the information they need

The changing ‘face’ of the Commission: then…..

• Bullet 1• Bullet 2• Bullet 3• Bullet 4

……and now

New(ish): regulatory approach

• Bullet 1• Bullet 2• Bullet 3• Bullet 4

Our regulatory statement – some key phrases

• Compliance with legal obligations• More rigour in holding charities to account• Act robustly• Uphold definition of charity• Exploit data to identify risk• Accurate register• Accessible information

New on our website – registration guidance

• Bullet 1• Bullet 2• Bullet 3• Bullet 4

New on our website – operational case reports

• Bullet 1• Bullet 2• Bullet 3• Bullet 4

New (ish): conflicts of interest guidance

• Bullet 1• Bullet 2• Bullet 3• Bullet 4

* Checklist * Case study

* Legal underpinning

Conflicts of interest – three step action plan

• Identify

• Prevent

• Record

Talk of robust regulation is all very well BUT

What are we doing about it?

More investigations and use of powers

15

64

Charities under inquiry

2012/132013/14

216

540

Use of powers

2012/13 2013/14

..and what will help us in the future?

Improved legal safeguards and powers

The draft Protection of Charities Bill– widens automatic disqualification criteria– Gives us powers to:

• Disqualify • Remove• Issue formal warnings• Direct a charity to wind up

– But won’t become law this side of the General Election

Coming shortly….AR15

New questions in the next Annual Return

• income from contracts / grants with the State• policy on paying staff?• review of financial controls?

Coming shortly…SORPs 2015

www.charitysorp.org

New SORP – clearer information

And finally …

The essential trustee – why update it?

• Around for as long as the IPhone• Published as a booklet• New guidance:

• risk, • decision making• investment • conflicts of interest

• Reading online is different• CIOs now ‘mainstream’• Commission’s new regulatory stance

The essential trustee – what’s new

• Better layout for reading online• Plainer language• Links to other guidance – less repetition• Lessons from investigations – what can go

wrong and how to avoid it• Emphasising that it’s for all charity trustees,

not just registered charities

Trustees’ role as described in the new (draft) CC3

You must:• Carry out your charity’s aims (or purposes)• Obey your governing document and the law• Act in the charity’s best interests• Manage the charity’s resources responsibly• Act with reasonable care and skill

You should:• Make sure your charity is accountable• Plan for the future

The guide is structured around these duties

Questions?

www.charitycommission.gov.ukwww.gov.uk

@ChtyCommission NCVO / BWB Trustee Conference

10 November 2014