Strengthening Scottish charity law: analysis of engagement responses

4. Proposal 2

Context

4.1 Proposal 2: An Internal Database and External Register of Charity Trustees.

4.2 Proposal summary: OSCR currently holds limited information on the 180,000+ charity trustees involved in over 25,000 charities in Scotland. The law only requires the Scottish Charity Register to set out the principal office of the charity or the name and address of one of its trustees. The option proposed is for OSCR to establish a new register of trustees to provide valuable and relevant information to better support effective regulation of charities and their trustees, through improved compliance, investigation and engagement work. The proposals include:

• An internal database for OSCR's use only i.e. name, date of birth (for identification purposes), home address, email address. This register could also include the names of any person removed as a trustee following an inquiry by OSCR under the 2005 Act or preceding legislation.
• A reduced external register for public use. This could contain trustee names (including removed trustees) and a principal office or trustee contact address against each charity.

4.3 2019 Consultation response summary: The majority of respondents reported that OSCR SHOULD be able to collect trustee information for use in an internal database. Some 71% of respondents SUPPORTED the proposal for the names of trustees to be published on the external public register.

4.4 List of disqualified trustees (removed by OSCR): The majority of respondents reported that the names of trustees who have been removed following an inquiry by OSCR SHOULD BE PUBLISHED on the external public register (79%).

Question 3

What information should be included in an internal database?

Broad support for the type of information proposed by the Scottish Government

4.5 There was broad support within online survey responses that the internal database should contain information such as name, date of birth, home address, email address, as well as the names of any person removed as a trustee following an inquiry by OSCR under the 2005 Act or preceding legislation (circa 68%).

Concerns raised

4.6 A further one-fifth were broadly supportive of the proposal in principle, but had some concerns and/or requested greater clarity.

4.7 Where there was any hesitation regarding the specific proposals, this typically centred on the sharing of home addresses and personal email addresses for the purposes of the internal database (e.g. "could OSCR hold the address of the charity rather than the Trustees' home address?").

4.8 A common theme was that a "proportionate" approach should be adopted, and that an internal database should only capture the type of information needed to support OSCR to undertake effective regulation of charities and their trustees (i.e. information deemed "essential", "minimum amount necessary").

4.9 The importance of ensuring information on an internal database was relevant, accurate and up-to-date, as well as appropriately stored, protected and controlled was also emphasised.

4.10 Wider concerns raised, but to a lesser extent, were:

• The administrative burden on charities, especially small charities.
• The effect on charity trustee recruitment.
• A need for a more detailed justification for an internal database to be provided to explain how it would assist OSCR in the exercise of its functions.

Additional information that could be considered for the internal database

4.11 A relatively large proportion of online survey respondents went onto suggest additional information that the Scottish Government could consider recording on the internal database (circa 33%). The most common additional suggestions proposed included:

• Telephone number.
• Trustee appointment and resignation dates.
• Trustee role (e.g. Trustee/Secretary/Treasurer).
• Current and/or previous trustee of any other charity (and/or Director position held), and duration of service.
• Profession/occupation.

4.12 Wider suggestions mentioned, but to a lesser extent than those noted above, included:

• Trustees suitability for the role (including a copy of signed declarations).
• Criminal record check (e.g. any unspent convictions)
• Disclosure and Barring Service (DBS) check/certificate.
• Bankruptcy history.
• Attendance record for the previous year.
• Conflict of interest statement.
• Whether related to another trustee(s) in the same organisation.
• Any removal from being a trustee by the Charity Commission for England and Wales.

Wider points raised

4.13 There was some reference for the information on an internal database to match what is collected by Companies House for its register, but this was limited.

4.14 A very small number of online survey respondents were not supportive of an expanded internal database at all.

Question 4

How should the internal database information be kept up-to-date?

Two main views provided

4.15 The main theme that emerged from the online survey was that the best and most effective way for information on the internal database to be kept up-to-date was through Trustee Annual Return updates – aligned with submission of Annual Reports and Accounts (circa 57%), and done through OSCR's online system.

4.16 Another viewpoint was that the system adopted could allow or encourage charities to make electronic "event-based reports throughout the year" (circa 34%). These respondents were supportive of having an option to update OSCR throughout the year, and/or statutory obligations to update OSCR, including on any "significant changes" within a specified time period. Where a time period was mentioned, this varied and ranged from 14 days (e.g. similar to Companies House), to one month, within 60 days or within three months.

"Whatever time limit is chosen, any change must be accompanied by clear messaging from OSCR that compliance with the notification requirement is a specific legal duty imposed upon charity trustees, and should be further accompanied by a strong emphasis on education of the sector on the need for compliance". Charity Law Association

4.17 Having a mix of options for keeping the internal database information up-to-date was considered beneficial from the perspective that it could:

• Help to minimise the administrative burden on charity trustees.
• Provide OSCR with the most up-to-date and accurate data with which to carry out its regulatory duties.
• Improve the interaction between the regulator and charities/trustees.

Wider points raised

4.18 The inherent challenge of balancing the need to ensure accuracy of the internal database against the administrative burden to charities, and particularly smaller charities, was again acknowledged within the responses.

4.19 A point noted by another regulator in Scotland was that it would also be important to minimise duplication in information requests (e.g. through the use of Memorandum of Understanding).

4.20 Finally, a small number of online survey respondents commented that information on the internal database should be kept up-to-date in the same way adopted by Companies House.

Question 5

What information should be included in a public list of charity trustees?

Strong support for a public list of charity trustees

4.21 First, as was the case in the 2019 consultation, strong support was expressed for a reduced external register for public use within the online survey (circa 75%). Additionally, some online survey respondents expressed partial support for the proposals (e.g. name only to be published).

4.22 Many of the points raised in support of a public register focused on the following:

• It would strengthen transparency regarding who is in management and control of charities.
• It would bring OSCR in line with the practice of other UK Charity Regulators.
• The information was already available within charity annual accounts and therefore in the public domain.
• That the information was also currently available for charities that were registered via Companies House, and that consistency of approach would be sensible.

4.23 Second, these respondents also typically concurred with the proposal that a public list of charity trustees should include:

• Trustee names (including removed trustees).
• A principal office or trustee contact address against each charity.

4.24 Publically available information on all trusteeships previously/currently held was considered important for cross-referencing.

Main concern raised

4.25 There was some concern/opposition raised around the use of trustee private home addresses. This mirrors feedback provided to earlier questions, and the importance of ensuring individual/personal privacy and safety.

Additional suggestions for information to be included in a public list

4.26 Further, around one-third of respondents that reported support for a reduced external register for public use went onto propose additional information that could be included on the public list of charity trustees. The most frequently reported suggestions included:

• Trustee appointment and resignation dates.
• Trustee status - current, retired or disqualified.
• Position of office.
• Date of birth (i.e. month and year for identification purposes).
• Nationality.
• Occupation.
• Public offices currently held/directorships of private businesses related to any charities for which the person is a current trustee which might create a potential conflict of interest.
• Charity telephone number/email address.

Views of those not in support of a public list of charity trustees

4.27 Fewer online survey respondents reported that there should not be a public list of charity trustees (circa 11%). The main points raised were that:

• The general public could access this information directly through charity annual accounts, and that contact addresses for charities were published on the Scottish Charity Register (i.e. there was an existing point of contact).
• Appropriate safeguards would be required to protect the privacy of trustees and prevent any data breaches or fraud. Note – this point was also raised by online survey respondents that supported the proposals for the public list of charity trustees.
• There should be a right to dispensation if publicly available information would put a trustee at risk.
• It might have a negative effect on charity trustee recruitment.

Question 6

In what circumstances should there be an exception to being included in a public list?

Two main viewpoints expressed

4.28 Online survey responses in the main fell into two camps:

• Around two-thirds felt there should be exceptions to being included in a public list.
• Over one-quarter reported there should not be any exceptions (27%).

4.29 A common theme was that an exception should only be granted in exceptional circumstances.

Circumstances where there should be an exception

4.30 The main circumstances identified for there to be an exception to being included in a public list were:

• If disclosure could lead to harm to mental or physical health or wellbeing or could otherwise place an individual at serious risk.
• If disclosure jeopardised the safety or security of any person or where any person might be targeted as a result of discrimination or prejudice. The profile of trustees was mentioned, with age, ethnicity and vulnerability relevant factors.
• If it posed a serious risk or violence or intimidation because of the nature of a charity's activities (e.g. medical research, human rights, domestic abuse, sexual abuse, family planning, ethnic minorities).

4.31 Wider circumstances noted, but to a lesser extent, included:

• Where withholding was otherwise permitted under company law (regardless of whether the charity is incorporated or not).
• Witness protection.
• Where a trustee is part of a formal inquiry or investigation.

4.32 Wider feedback, albeit again not mentioned by a majority, was that the circumstances for there to be an exception to being included in a public list could match that used elsewhere (e.g. those raised at Question 1 for dispensation to full annual reports and accounts publication, by other UK Charity Regulators, by Companies House). A further point made was that existing provision at section 3(4) of the 2005 Act could be replicated or expanded to incorporate the external trustee database.

General points raised

4.33 More general points raised were that OSCR would require to:

• Clearly define the grounds on which a dispensation might be granted.
• Adopt an approach that ensures each request was considered on a case-by-case basis.
• Provide assurance that the information would be appropriately stored, protected and controlled.
• Develop appropriate training and guidance for the sector, including examples of what would constitute a successful request for exception.
• Outline how long the dispensation/exception was likely to last and put in place a mechanism for regular review to ensure the criteria and business case remains valid.

4.34 Finally, a small handful of online survey respondents reiterated their opposition to there being a public list of charity trustees at all.

Question 7

How long should a disqualified trustee remain on the list?

Mixed views on length of time a disqualified trustee should remain on the list

4.35 Views were relatively mixed on the length of time a disqualified trustee should remain on the list, albeit there was a leaning towards this being time-limited:

• Around 17% reported that disqualified trustees should remain on the public list permanently.
• Circa 43% reported that it should be time-limited. This ranged from a period of six months to 25 years, and everything in between. The average length of time reported was around eight years.
• Some 22% reported that a disqualified trustee should remain on the list for the term of their disqualification/until conviction is spent. Further, a few went onto to propose that inclusion on the list should continue for a certain period of time beyond when the disqualification comes to an end.
• Around 16% said that it should depend on, or be proportionate to, the severity of the reason for disqualification, with some suggesting that a tiered approach could be considered (maximum = permanent).
• A couple of respondents stated that the disqualified trustee should be removed immediately from the list.

4.36 In order to ensure consistency of approach, there was some (but limited) reference to alignment with the practice of others – e.g. Charity Commission for England and Wales, Companies House.

4.37 A wider point raised was that a process would require to be put in place to remove the name of a disqualified trustee following death.

Some support for a search facility rather than list

4.38 There was some, but limited, support explicitly expressed for a search facility rather than a list – points raised are reflected in the OSCR response:

"….. there would be a search facility on our website which would allow a user to enter a person's name and address to check if they have been removed. We would only propose to publish the names of those persons removed as charity trustees under the 2005 Act (or by the Scottish Charities Office under the preceding legislation). By making this information publicly available, charities will be able to undertake the necessary due diligence in terms of the trustees they have on their board. There are of course other reasons why a person may be disqualified as a charity trustee. As such we would also propose to produce guidance with links to the other relevant databases to assist charities to carry out full checks.

The other databases include the Companies House Register of Disqualified Directors, CCEW's Register of Removed Trustees and the AiB's Register of Insolvencies.

In terms of the 2005 Act there is currently no time limit on the period an individual is disqualified from acting as a charity trustee by the Court of Session following an application by OSCR for their removal. In the circumstances the individual would remain on the list of removed charity trustees unless or until their removal was waived following an application to OSCR".

Question 8

What information should be available in the disqualified trustee list?

4.39 Almost 90% of online survey respondents provided a response to Question 8.

4.40 A strong and common theme was that the information available would require to be sufficient to avoid the risk of confusion between different people with the same name (i.e. there should be no doubt or ambiguity about identification). It was reported this would protect charities against the risk of recruiting a trustee or office bearer who might pose a risk to the charity's financial position or public reputation.

Two main viewpoints expressed

4.41 There were two main viewpoints:

• First, that information publically available should be minimal, and not compromise an individual's right for privacy under GDPR - but as noted above, sufficient to avoid the risk of confusion between different people with the same name. Here, there was broader support for a search facility such as that used by UK Charity Regulators.
• Second, that more detailed information should be made publically available, such as details pertaining to the disqualification. For example, information similar to that published by Companies House.

Varied views on the type of information to be made publically available

4.42 Responses were, however, particularly varied and mixed regarding the level of detail that should or should not be made publically available.

4.43 Where suggestions were provided on the nature and type of information that should be available in the disqualified trustee list, by far the most common responses were a mix of some and/or all of the following:

• Name of trustee.
• Date of birth (i.e. month and year).
• Name of charity, charity number, charity status, and correspondence details.
• Names of any other charity/company the trustee was involved in prior to disqualification.
• Date of disqualification order.
• Reason for / category of disqualification
• Period of disqualification.
• Wider suggestions, but not mentioned to any great extent, were:
• Whether the individual accepted the OSCR decision.
• Whether the charity objected or accepted the OSCR decision.
• Whether they have the court's permission to continue to act as a trustee/director.
• Local authority.
• Role (e.g. Trustee, Secretary) / paid or unpaid role.
• Link to disqualification ruling.

"A system similar to that in England and Wales, where there is no public register/list of disqualified trustees but where the Charity Commission has a system which provides for a name to be input and identifies whether there is a match, would appear to better accord with the data protection principles set out in the Data Protection Act 2018". The Church of Scotland

"The Charity Commission for England and Wales discloses name, date of disqualification order, charity number, charity name, and charity status (i.e. whether registered or not). There is then an ability to double check with the Charity Commission against a particular name if an enquirer wishes to clarify the identity of a person who may be disqualified. A similar approach could easily be followed in Scotland, although on balance we believe that the name of the charity trustee and the date of disqualification may be sufficient, provided that there is then an ability to enquire further of OSCR to clarify the identity of a disqualified trustee". Charity Law Association

"…we envisage a search facility rather than a list as such. If there was a partial match with a removed trustee but the user was not sure if they were the same person, they would be advised to contact OSCR for further information. We could then verify, whether the person they were checking was the individual removed as a charity trustee where the information we held enabled us to do so. We are legally required to publish an inquiry report where we use our power to suspend a trustee.

Where we have applied to the Court of Session for the suspension or removal of a charity trustee we would also publish an inquiry report about the action taken. The names of those removed are, therefore, already in the public domain but not in a format that would facilitate an easy search by names. We wish to make this information available to the public in a more useable and useful format". OSCR