23 March 2018
The Charity Commission has issued new guidance which clarifies its approach to the recovery of property which has been lost through a breach of trust.
The Commission makes clear that trustees have a duty of care towards their charities and its property and advise them to respond appropriately and act to recover funds lost to the charity.
The policy also makes clear that where serious losses occur to the funds of the charity, trustees should consider legal advice when considering issues of recovery. Trustees also need to take into account a range of factors including the extent of funds lost, the evidence of individual misconduct, the likelihood of success and the ultimate recovery of the loss, and the wider impact on the charity. The Commission has said that it is able to give advice or provide consent before taking any action.
In instances where it is appropriate for trustees to act but they do not do so, the Commission will consider regulatory action against the trustee to ensure that they pursue the matter. In very exceptional cases, the Commission will consider whether to bring enforcement action in the public interest, including legal proceedings, to recover losses to the charity. Other possible actions which the Commission may take include working with the police, or opening a statutory inquiry leading to regulatory action, for example appointing replacement trustees or an Interim Manager.
For Charity Commission guidance see: CC Guidance