The Charities (Protection and Social Investment) Act 2016
The Charities (Protection and Social Investment) Act 2016 (the 'Act') received Royal Assent on 16 March 2016. The Charities Act has been amended many times since its first reading in the House of Lords last May and we have set out below the provisions which made it into the Act. At present, the substantive provisions described below have not yet come into effect, although the Cabinet Office is working an implementation plan for these provisions.
Official warnings by the Commission
Perhaps the most significant increase to the Charity Commission's powers is the new power to issue official warnings. The purpose of an official warning is to allow the Charity Commission to take formal but not disproportionately forceful steps with regard to charities about which it has concerns. The Charity Commission may issue an official warning to a charity (or its trustees) where it considers that there has been a breach of trust or duty or other misconduct or mismanagement. The Charity Commission must give notice of its intention to make an official warning to the charity and its trustees. The notice must specify:
the grounds for the warning; any action the Charity Commission considers should be taken (or that the Charity Commission is considering taking) to rectify the misconduct or mismanagement (although this power cannot be used to give directions to a charity); whether and, if so, how the Charity Commission proposes to publish the warning; and a period within which representations may be made to the Commission about the content of the proposed warning. The Charity Commission must take into account any representations made, but can (without further notice) issue the warning either with or without any modifications. One of the biggest concerns with official warnings is that the Charity Commission is able to make these public and it is expected that the Charity Commission will do so in all but exceptional cases. Concerns have been raised that there will be no appeal to the Charity Tribunal for official warnings - given that these official warnings can be made public, there is a serious risk of adverse publicity for charities. Challenging official warnings will not be straightforward. Charities and trustees will need to be alert to any correspondence from the Charity Commission, particularly correspondence relating to a potential official warning. Reports suggest that the Charity Commission will consult on draft guidance on how it will use this new power.
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