5. Proposal 3
5.1 Proposal 3: Criteria for automatic disqualification of charity trustees and individuals in senior management positions in charities.
5.2 Proposal summary: Changes to the charity legislation for England and Wales have extended disqualification criteria for charity trustees and senior employees (Chief Executive and Chief Financial Officer). To ensure criteria in Scotland are fit for purpose, the option proposed is to extend the criteria for disqualification to ensure parity with legislation in England and Wales, with the provision that individuals could still apply to OSCR for a waiver from disqualification as the law currently allows.
5.3 2019 Consultation response summary: The vast majority of respondents supported plans to extend the criteria for disqualification and removal of charity trustees in Scotland to match the criteria in England and Wales (84%).
5.4 Some 79% respondents supported plans to extend the criteria for disqualification and removal to those in senior management positions.
5.5 The responses highlighted a number of concerns, namely what is meant by "certain senior management roles" and how this applies to small charities with few/no paid staff.
5.6 There were concerns about the implications for ex-offenders recruited by charities as staff or trustees and whether the proposal could "deprive charities of valuable lived experience". Some respondents felt that a balance needed to be struck between supporting those with criminal convictions to gain meaningful volunteering and employment opportunities, while simultaneously protecting the reputation of a charity.
What factors should be considered in defining a 'senior manager'?
Function of role more relevant than job title
5.7 In defining a "senior manager", the function of the position was considered to be of most relevance rather than the job title (e.g. management and control functions, The Charities Act 2011 provides a definition of a senior management function).
5.8 The following factors were most commonly reported in online survey responses to help support the charity sector identify relevant senior manager positions (i.e. reported by a majority):
- Chief Executive, Chief Financial Officer, and Chief Operating Officer (or similar).
- Delegated responsibility for leading and managing a charity on a day-to day basis (e.g. "key management personnel" as defined in the Statement of Recommended Practice (SORP) and Financial Reporting Standard FRS102).
- Delegated responsibility for controlling the charity's finances.
- Direct reporting line to the board of trustees / person from whom the board of trustees takes advice.
- Staff recognised internally as part of the Senior Management Team (e.g. as outlined within a charity's organisational structure).
- Financial and/or strategic involvement at a decision-making level (i.e. budget responsibility, strategic responsibility, policy responsibility).
Wider points raised
5.9 Wider factors noted, but to a lesser extent than those noted above, include:
- Management responsibility for staff and/or volunteers.
- Office bearers and trustees.
- That the size of the charity should be taken into account (i.e. income bracket).
- Paid position / anyone whose remuneration falls into the declarable bands required by SORP / FRS102
5.10 Finally, a small handful of online survey responses suggested that there could be broad alignment with UK Charity Regulators guidance for senior managers that are affected by disqualification.
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