Charity Commission

Lord Best Excerpts

Thursday 27th February 2014 Grand Committee

[Lord Best (CB)]

My Lords, the question I am posing and attempting to answer in this debate is, “Are there lessons for the Charity Commission from the parallel activities for the regulation of non-profit housing associations, most of which are charities?”. The Homes and Communities Agency regulates so-called registered providers and nearly three-quarters of these are “exempt charities”, operating outside the Charity Commission’s regulatory powers

Two aspects of the arrangements for the voluntary housing sector seem worth considering for the wider charity sector. First, would it help to copy the model of having an ombudsman to resolve complaints from service users? Ombudsman services cover many industries—financial services, telecoms, electricity and water companies, and legal services—as well, of course, as most public services. However, only a minority of charities, like the charitable housing associations, are covered, because they come under a specialist ombudsman service. Just as the Housing Ombudsman takes a load off the shoulders of the HCA, I suggest that a charities ombudsman could relieve pressure on the Charity Commission by sorting out the everyday service disputes that can prove so arduous and time-consuming.

I declare my interest, at one remove, as chair of the council of the Property Ombudsman, which deals with private sector estate agents and managing and letting agents. This experience has led me to the view that ombudsman services—independent redress schemes, free to the consumer and service user—can be very valuable. An ombudsman has teeth in being able to make awards—usually financial compensation—when a complaint is upheld, in being able to publicise bad behaviour and, where appropriate, in passing on its findings to the regulator, in this case to the Charity Commission. Let us have a charities ombudsman.

My second proposition relates to the concept of co-regulation, which, I feel, the Homes and Communities Agency is taking to a more refined level than the Charity Commission. The co-regulation approach brings together the regulator and the regulated. It encourages the organisation that encounters a problem, which may be governance-related, to take it to its regulator as early as possible and to discuss a mutually acceptable way forward. In place of hoping that the regulator will never find out about the problematic issue, the board—the trustees—shares the burden and gets the advice of the regulator.

This is not a mechanism for discovering criminal intent or gross misconduct but, for those cases where things have gone wrong and the trustees are well intended, co-regulation can sort out difficulties in an atmosphere of mutual trust, not defensiveness and hostility. It requires the regulator to assist the organisation to take steps to put things right and to keep in close contact. This contrasts with the regulator standing back and not coming down from on high in a heavy-handed manner. Direct intervention need happen only in extreme cases. I believe that the Charity Commission is heading in this direction and, from experience of seeing how co-regulation can work, I commend an acceleration of that process. If the way for the Charity Commission to increase its effectiveness is by taking forward the two suggestions I am making here, perhaps by raising some part of the funding from an annual levy on the charities themselves, that might be a price worth paying for a better service for charity service users and for the charities themselves.