Nick Mott (Deputy Head of Guidance & Practice) talks about the automatic disqualification rules coming into force on the 1 August 2018, and how you can prepare.
Almost anyone can run a charity, but restrictions mean some people are automatically prevented (disqualified) from being able to do this unless they have clearance from the Charity Commission.
These restrictions are being added to, and they will apply to a wider group of people. The Office for Civil Society (OCS) published details of the changes to the law and the timetable on the 17 January 2018, so that charities and individuals have at least 6 months to prepare for their introduction on 1 August 2018.
Writing this now in the winter, the changes due in the summer seem a long way off but both OCS and the Commission want to allow plenty of time for those who will be affected to prepare.
My blog provides a quick tour of the changes and what they mean for charities and individuals who run them. If you need more detailed information, read our guidance on GOV.UK:
So, who needs to know about this? Well, all charities do because they’ll need to update their recruitment and post appointment practices to reflect these changes.
It’s also important that people who run charities know about the changes: you will need to make sure that the restrictions don’t apply to you. If they do apply, you will need either to get clearance (a waiver) from us to continue to act in your role, or stand down. We don’t think many will actually be affected by the changes, but it’s important to check.
One of the main changes will see the automatic disqualification regime extended to ‘senior managers’ – at the moment it is limited to trustees but from 1 August, those in the role of chief executive or finance director (or equivalent) will also be affected.
Disqualification won’t depend on the title of the post but on the responsibilities and accountability of the actual role. Our guidance for individuals gives some detailed help with these definitions. It’s important to be clear that no restrictions apply to these senior manager roles until 1 August 2018.
The other main change is that there will be more reasons for automatic disqualification. Below is the basic list of reasons, it includes both the current ones and the new ones that take effect in August. The list below is a summary version, if you think any of these might apply to you, check the disqualifying reasons table in the guidance for individuals.
List of reasons for disqualification: those marked * are new and only apply from 1 August 2018
- being on the Sex Offenders’ Register*
- unspent conviction for an offence involving
- deception or dishonesty
- terrorist offences*
- money laundering*
- misconduct in public office*, perjury*, perverting the course of justice*
- contravention of certain preventative Orders of the Charity Commission (s.77 of the Charities Act 2011)*
- attempting, aiding or abetting these offences*
- contempt of court*
- designation under specific anti-terrorist legislation*
- found guilty by the High court of disobeying a Commission order or direction*
- removed from:
- trusteeship, or as an officer*, agent* or employee* of a charity by the Court or the Commission for misconduct or mismanagement
- a position of management or control of a charity in Scotland for mismanagement or misconduct
- disqualification order under the Company Directors Disqualification Act 1986
- undischarged bankruptcy
- composition or arrangement with creditors which includes an individual voluntary arrangement (IVA), and is currently on the Insolvency Service Register
If you think that you’ll be disqualified because of any of the new restrictions, remember that the disqualification doesn’t take effect until 1 August 2018. You have time before then to double check that you’ll be disqualified (and take legal advice if you need to).
If you’re sure, then your options are either to resign, or to apply to us for clearance (a waiver) to continue in post.
It will be possible to apply for a waiver any time from 1 February 2018. Read our guidance about waivers to find out how to apply, but note there are some situations (explained in the guidance) where a waiver is not an option.
The point of these further restrictions is of course to provide some protection for charities, but the system allows us to waive disqualification for those whose experience and skills in running charities should not be lost.
We’d strongly suggest getting your waiver application in as soon as you can, ideally by 1 June 2018, to get a decision in good time. You, and any charities that you’re running know where they stand and can make plans.
For charities, just remember to add these new restrictions into the recruitment and post appointment declarations that you ask trustees, CEOs and FDs to complete.
We’ll be publishing an example declaration in February for you to use. If you find that someone is going to be disqualified, they will only be able to take up (or continue in) the post if they get a waiver from us.
Our detailed guidance for charities provides advice on what to do if you find someone is disqualified.