Changes to automatic disqualification rules for charities

New rules come into force on 1 August 2018 which widen the scope of the current automatic disqualification rules for charities. The main aim of the new rules is to impose tighter restrictions on who can run or lead a charity.

Key changes

The current automatic disqualification rules:

• Apply to charity trustees only
• Relate mainly to offences of bankruptcy and unspent convictions for crimes involving dishonesty or deception.

The new automatic disqualification rules introduce two key changes which widen:

1. The range of reasons for which an individual is disqualified from acting as a trustee (which now include having certain unspent convictions for terrorism or money laundering, as well as being on the sex offenders register)
2. The application of the persons to whom the automatic disqualification rules apply to now include certain senior manager positions as well as charity trustees.

Relevant senior manager positions are the Chief Executive (or equivalent) and the Chief Finance Officer (or equivalent). However, it is important to note that it is the function (not the title) of the senior manager positions which dictates whether the new rules are applicable.

Waivers

Individuals who would be disqualified from acting as a charity trustee or a senior manager under the new rules can apply to the Charity Commission for a waiver of their disqualification allowing them to continue acting in their role. Whether the Charity Commission decides to grant a waiver will depend on a range of factors, most especially whether waiving a disqualification is in the best interests of the charity.

How charities can prepare for the new rules

Acting as trustee whilst disqualified is currently a criminal offence, and it will continue to be so under the new rules. Charities should already have adequate procedures in place for identifying and appropriately managing charity trustees who may fall within the scope of the current rules. Practically speaking therefore, to ensure compliance with the new rules most charities will only need to update and reinforce their recruitment and appointment systems for trustees and then extend these procedures to those senior manager positions that will be affected.

Practical steps to take include:

• Pre-appointment checks on trustees and relevant senior managers
• Check which senior manager positions in your charity would fall within the scope of the new rules
• Individuals who find themselves disqualified under the new rules must cease acting in their role and formally resign (unless they obtain a waiver)
• Declaration forms to be signed by both prospective and current trustees declaring that they are not disqualified from acting under the current or new rules (and once appointed, a fresh declaration should be signed annually). The Charity Commission has produced helpful sample declarations for both senior manager positions and trustees:
  • Senior manager declaration
  • Trustee declaration