The new rules will place greater restrictions on who can act as a charity trustee, and charities should take action now.
The Current Position
Currently, a person is disqualified from acting as a charity trustee if they fulfil specified disqualification criteria, including bankruptcy or unspent convictions for crimes involving dishonesty or deception. It is an offence for a person to act as a charity trustee whilst they are disqualified and charities are prohibited from appointing a disqualified trustee (unless their disqualification has been waived). It is also already good practice for charities to ensure that they have robust systems in place to identify trustees who become disqualified after they have been appointed.
Two Key Changes
From 1 August 2018, there will be two key changes to the rules on automatic disqualification:
- there is an increase in the number of reasons that will disqualify someone from acting as a trustee, including certain unspent criminal convictions (eg terrorism offences, money laundering and bribery), or being named on the sex offenders register
- a person who is disqualified from acting as a trustee will also be disqualified from holding certain senior management positions within a charity (eg chief executives or chief finance officers)
Anyone who will become disqualified by the proposed changes to the automatic disqualification rules can apply to the Commission for a waiver prior to the changes taking effect. Someone who is automatically disqualified from being a trustee under the rules may still be eligible to hold other positions, for example by volunteering, advising or being employed in non-senior management positions within a charity.
What Action Should Charities Take?
Charities are advised to take early action to prepare for the rule changes in order to avoid facing administrative difficulties when the new rules come into force. For example:
- identifying which roles are affected by the changes and taking advice in cases where the guidance (particularly in relation to senior managers) is difficult to apply
- ensuring existing trustees are aware of the upcoming changes and the availability of a waiver process, and in particular, reminding them that holding office or employment whilst disqualified is a criminal offence
- requesting written confirmation from the holders of affected positions that they are not/will not be disqualified and that the disqualification criteria do not apply to them
- checking that no-one currently holding a relevant position is disqualified from holding that position and putting in place systems to check that those who will be appointed to relevant positions in future are not disqualified
- we suggest regularly using a self-declaration form along with independent methods of checking, such as searching the Individual Insolvency Register, the register of disqualified directors, the register of persons who have been removed as a charity trustee, and obtaining criminal records information via the Disclosure and Barring Service (DBS) relevant to the role and duties being undertaken by the trustee. Basic level checks are available for all charity trustees and will provide information about unspent criminal convictions
- amending recruitment procedures to include confirmation that post holders are not subject to disqualification and carrying out eligibility checks for trustees and affected senior staff
The Charity Commission has recently published new example declarations for individuals to confirm that they will not be disqualified under the new rules. The Commission recommends that charities ask an individual who applies for:
- a senior manager position to complete the relevant declaration alongside any other pre-employment checks
- a charity trusteeship to complete the relevant declaration alongside the existing trustee declaration form
The Charity Commission has published some useful guidance for charities on what the changes are and how charities can prepare for them Charities may also be interested in our Charities OnStream service which contains some free resources and advice on being a trustee.
For more information, please contact a member of our Charity Law team on 020 7665 0917, or please complete the form below.