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Charities Bill [HL]

moved Amendment No. 6:"After Clause 8, insert the following new clause—"““CHAPTER 2A THE CHARITY INDEPENDENT COMPLAINTS REVIEWER    After section 2 of the 1993 Act insert— 2A   THE CHARITY INDEPENDENT COMPLAINTS REVIEWER (1)   There shall be a complaints reviewer to be known as the Charity Independent Complaints Reviewer (in this Act referred to as ““the Reviewer””). (2)   The function of the Reviewer will be to investigate complaints against the Charity Commission’s performance of its regulatory role and where appropriate make financial awards of compensation against the Charity Commisison, whether limited consolatory payments or unlimited payments for financial loss, and make recommendations. (3)   Except where the Reviewer finds the complainant has acted frivolously, vexatiously or unreasonably, the complainant shall not be required to pay any part of the costs of the investigation. (4)   No complainant shall be required to use an internal complaints procedure of the Charity Commission, the Ombudsman or the courts before the Reviewer will consider the case and any consideration by the Reviewer will not prevent the case subsequently being considered by the Ombudsman or the courts. (5)   The Reviewer shall be appointed by the Lord Chancellor on such other terms as he, after consultation, shall think fit.”””” The noble Lord said: My Lords, the purpose of this amendment is to set the existing Independent Complaints Reviewer on a statutory footing, who is at present appointed by the Charity Commission to look at complaints against itself, with the following significant alterations to the current arrangements: first, to allow the reviewer the power to award financial compensation, instead of merely being able to recommend it; secondly, to allow the reviewer to award compensation to a complainant for financial loss arising from a failure by the Charity Commission, as well as the existing consolatory payments for maladministration; thirdly, to minimise delay in assessing the reviewer by not requiring that the complainant use the Charity Commission’s internal complaints procedure first. Together, these changes will bring about a genuinely independent statutory alternative dispute resolution procedure, which will provide an alternative to the High Court as a route to access justice by charities, trustees and others. The reason for this amendment is to create a truly independent mechanism for charities, trustees and others to be able to challenge the Charity Commission when they think it is guilty of maladministration or acting unfairly, unreasonably or disproportionately, and to obtain financial compensation for maladministration and financial loss. At present, the Independent Complaints Reviewer is a creature of the commission, which may be ignored if the commission so chooses. By requiring the ICR not to take cases until they have been through the commission’s own complaints procedure, the commission has been able to use the complaints and the ICR process as a mechanism of delay—in one case, I am told, in excess of five years. The ICR is forbidden to even recommend to the commission the payment of compensation where a charity has suffered real loss as a result of the commission’s unfair, unreasonable or disproportionate behaviour. The ombudsman routinely refuses to take up cases where there is still the legal possibility of pursuing the commission through the courts. As we all know, this is a ruinously expensive process for charities and trustees, who have no recourse to legal aid. I understand from a letter that the Charity Commission sent to me when I asked how often it had paid compensation that, once, the expenses of Lincoln County Council for Voluntary Services—about £3,500 plus VAT—were paid by the Charity Commission. Another case was pointed out to me where a receiver and manager was appointed on a contingency basis. As the charity had no cash assets at the time, an indemnity was offered. The costs, however, were eventually met by the charity. So, in fact, there is only one occasion when the Charity Commission has paid out of its own pockets. In answering this proposal, the Minister drew comparisons between the advantages of the ombudsman and the proposed ICR, concluding that, on the whole, the ombudsman route is advantageous. I do not doubt that it is, but it is rarely available to charities in practice. In replying to the amendment on 12 October, as reported at col. 382 of Hansard, the Minister drew attention to the fact that the Parliamentary Ombudsman can deal with commission maladministration and can recommend financial compensation for real losses. Since the introduction of the Charities Act 1993, the Parliamentary Ombudsman has investigated only eight complaints about the commission’s conduct, upholding three of them and recommending financial compensation in two cases. For most complainants, his door has been firmly closed. The Minister may be right when he suggests, at col. 381, that the Parliamentary Ombudsman could do financially better for a charity or trustee than a statutory ICR. There are other reasons, however, for having a statutory ICR beyond financial compensation. It would have, and be seen to have, independence from the commission, would be likely to provide a quicker turnaround of complainants and would have greater experience of charities and the commission. At the moment, it looks to me as though we have a prosecutor, jury and judge all rolled into one. I beg to move.