by Emma Jordan, Trainee Solicitor
On 7th January 2019, the Scottish government opened a consultation on Scottish charity law. It has been over 17 years since the Scottish Charity Law Review Commission (the McFadden Commission) proposed establishing a Scottish charity regulator, and over 13 years since the Charities and Trustee Investment (Scotland) Act 2005 was first introduced.
Given the lack of recent reform, the Scottish government has agreed to a consultation which will decide on whether improvements to Scottish charity legislation are now needed. The proposed changes reflect those put forward by the Scottish Charity Regulator (OSCR). OSCR wants to enhance public trust and confidence in the charity sector by increasing transparency and accountability, providing itself with greater enforcement powers and streamlining operations which it hopes will ultimately increase efficiency.
David Robb, OSCR chief executive has said, ‘The proposals reflect our experience of working with the 2005 Act over the past 13 years and seek to improve the legislation rather than rewrite it.’ The consultation looks at a number of potential changes which would ultimately give the public greater knowledge of the goings on and the success of charities, issues that have grown in prevalence following the Oxfam scandal in 2018, as well as other examples of concerns over charitable status and funds being abused. The consultation suggests various options to ensure accountability such as providing an external register of charity trustees, publishing annual reports and accounts, and removing charities from the Scottish Charity Register if they are persistently failing to submit annual reports and accounts. In the 2018 OSCR survey, figures showed that 88% of people said that seeing evidence of a charity’s achievements and knowing how much of their donation went to the cause would improve their trust in charities.
Another reason for the consultation is that Scottish charity law is somewhat outdated in comparison to the position south of the border where charity law is governed by the Charities Act 2011. Not only has the legislation been updated more recently in England and Wales, there have already been further amendments made to it in the Charities (Protection and Social Investment) Act 2016. The 2016 Act gave the Charity Commission new powers to issue official warnings, actively disqualify people from serving as trustees, extend powers to direct charity property to be used in a certain way, extend circumstances in which a person is automatically disqualified from acting and give new powers for the government to support and intervene in the regulation of fundraising. The inconsistencies between Scottish charity law and legislation in the rest of the UK means that a person may be disqualified from acting as a charity trustee in England and Wales for different reasons than those which apply north of the border. Divergences like this highlight the risk of Scotland being viewed as a jurisdiction with weaker controls, as in certain circumstances they are unable to tackle those who pose a risk to charities in the way that English and Welsh law allows. The proposed consultation will therefore ensure greater consistency between the two jurisdictions which will ultimately improve support between OSCR and the Charity Commission.
The consultation’s contents are as follows:
- Publishing annual reports and accounts in full for all charities on the Scottish Charity Register
- An internal database and external register of charity trustees
- Criteria for automatic disqualification of charity trustees and individuals employed in senior management positions in charities
- A power to issue positive directions to charities
- Removal of charities from the Scottish Charity Register which are persistently failing to submit annual reports and accounts and may no longer exist
- All charities in the Scottish Charity Register to have and retain a connection in Scotland
- Inquiries into the former charity trustees of bodies which have ceased to exist and bodies which are no longer charities
- De-registered charities’ assets and public benefit
- The speed and efficiency of OSCR’s powers to gather information when making inquiries
- The reorganisation of charities established under royal charter, warrant or enactment.
The consultation runs from 7th January to 1st April 2019 and seeks views from members of the public, the charity sector and anyone with an interest in charity law.
If you have any questions in relation to the consultation, please contact our Charities legal team at firstname.lastname@example.org.