Charity Commission (Contingent Liability)

Wednesday 12th February 2014 Written Statements

[The Minister of State, Cabinet Office (Mr Nick Hurd)]

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Department concerned to present to Parliament a minute giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency.

Last year the Charity Commission matched the anonymised personal data of all trustees and charity correspondents registered with the Charity Commission against the CIFAS national fraud database on a pilot basis for which CIFAS membership was not necessary. The level of resulting matches to fraud risk were of concern and the board of the Charity Commission directed that it become a member of CIFAS to carry out a further pilot to develop clear information to: inform on the need for any action against individuals; support the development of a fraud risk profile for the sector; provide a means of checking new trustees and correspondents for linkage to fraud and right to remain in the UK. The commission proposes piloting this by the end of March 2014, by which time it will need to have joined CIFAS. The Charity Commission proposes continuing its membership without break after the first year should the pilot prove successful.

The minute therefore confirms the Charity Commission plans to enter into CIFAS membership shortly and that it will need to sign an indemnity with CIFAS.

A public authority may become (and subject to the rules of CIFAS, remain) a member of CIFAS provided that it is empowered and authorised (among other requisites) to execute the required deed of indemnity. The Charity Commission must provide a written indemnity, irrevocably indemnifying CIFAS, its chairman and directors, members, affiliates, participating agencies, participating users and employees of CIFAS, on or prior to joining CIFAS, against claims resulting from any breach of statutory duty or breach of the Data Protection Act 1998 on the part of the Charity Commission in connection with its membership of CIFAS.

The Charity Commission must subscribe to the CIFAS group libel insurance scheme, which underpins the CIFAS indemnity arrangements. The upper limit of indemnity for the insurance scheme is currently limited to £5 million —plus an excess agreed annually, currently £5,000. The deed of indemnity is, however, unlimited and therefore covers amounts claimed in excess of £5 million or, where a claim results from the provision of inaccurate data deemed avoidable, the entire value of the claim.

The departmental minute notifies Parliament of the Charity Commission’s intention to execute this deed of indemnity and subscribe to the CIFAS group libel insurance scheme. The notification to Parliament is proposed to last for three years from commencement of CIFAS membership. The Charity Commission shall, of course, provide further notification if the undertaking is likely to change within this period. The situation will be reviewed after three years and, if the Charity Commission intends to maintain its CIFAS membership, Parliament will be notified accordingly.

The Charity Commission does not consider the risk of the indemnity being called upon to be significant. The Charity Commission will only share data where it is lawful to do so and in accordance with the provisions of the Data Protection and Human Rights Acts. Maintaining accurate and up-to-date information will limit the chance of incorrect information being passed to CIFAS. All information will be shared in a secure manner in line with Cabinet Office guidelines on transferring data. Further, a CIFAS member that receives a CIFAS warning from the system is not allowed to automatically refuse an application or to close a facility because of the warning. They are required to make further enquiries to confirm personal identification details before making a decision. If a liability is called, provision for any payment will be sought through the normal estimates procedure.

The Treasury has approved this proposal in principle. If, during the period of 14 parliamentary sitting days beginning on the date on which this minute was laid before Parliament, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.

I am arranging for the minute to be deposited in the Library of the House.