It’s been a big week for social impact investing with the Government publishing its response to an Advisory Group’s report titled “Growing a Culture of Social Impact Investing in the UK”.
Save the date for our Annual Charity & Social Enterprise Tea Party which will be taking place on Monday 17th September. Further details will be circulated soon.
At a glance
The government has launched a consultation on giving members powers to hold their pension schemes to account over how social and environmental factors impact their investments.
Draft regulations for new company reporting requirements have been published.
The Charity Commission for Northern Ireland has announced that it is issuing text message alerts to 843 trustees of registered charities in Northern Ireland which are due to submit their annual reporting information by the end of June 2018.
The Commission has announced that it has opened a statutory inquiry into a charity which is not yet registered, Combined Funds Limited, and has frozen its bank accounts. The purposes of the grant-making organisation are to advance religion in accordance with the Jewish Orthodox faith and to relieve poverty. In the financial year ending 2016, the charity had an income of over £700,000 with net assets over £6.5m. It has 9 trading subsidiaries. The Commission opened a compliance case in 2017 following its concern that the organisation had been operating for a prolonged amount of time without having registered as a charity. As a result, the trustees submitted an application to register. The Commission has now assessed the charity’s financial accounts and bank records and alleges that there are a number of serious regulatory concerns, including potential conflicts of interest and connected party transactions. The charity’s main activity appears to be being making grants to other charitable organisations but the Charity Commission states that there is no formally agreed grant-making policy in place. The charity’s registration application is currently on hold pending the outcome of the inquiry.
The Commission has also announced that it has opened an inquiry into Sikh charity Asthan Babe Ke Trust (1027792). The Commission says that it has serious regulatory concerns that the charity has not been properly managed by its trustees, as a result of an internal dispute. A regulatory compliance case was opened last year for the Commission to consider allegations of personal benefits, unmanaged conflicts of interest, invalid appointment of trustees, undeclared income and poor financial controls. The Commission set the charity an action plan to help the trustees resolve the internal dispute but according to the Charity Commission, the trustees have failed to make meaningful progress with this. Other Charity Commission concerns which have led to the statutory inquiry include: whether the trustees have sufficient oversight and control over the charity’s finances.
BOND has published this blog “Safeguarding: Where next for the sector?”
In April, the inquiry into child sexual abuse published its first interim report.
The Department for Exiting the European Union (DExEU) has published a technical note on the benefits of a new data protection agreement between the EU and the UK. The note is part of a series of papers produced by the UK negotiating team for discussion with the EU, in order to inform the development of the future framework. The note argues that a legally-binding data protection agreement between the EU and the UK will bring a number of important benefits to the EU:
- Improved legal certainty, stability and transparency.
- Better cooperation on enforcement and investigations for EU citizens.
- Cost savings and more efficient processes for EU businesses.
- Benefits to EU regulators, citizens and businesses from the Information Commissioner's Office's (ICO) resource and expertise.
The note also argues that these are benefits that a standard Adequacy Decision cannot provide as they will deliver better outcomes for EU citizens exercising their rights, reduce the costs for EU businesses, lower the risks of interrupted data flows and avoid duplication of effort and decreased cooperation between regulators. The note states that an agreement will not affect the EU's ability to change its own data protection legislation, nor the EU's decision-making autonomy. The UK is not seeking decision-making power over future EU laws, has no intention to impede EU policy making in data protection, and respects the fact that certain EU bodies are subject to CJEU jurisdiction.
Gloucestershire Police has been fined £80,000 by the Information Commissioner’s Office (ICO) after sending a bulk email that identified victims of non-recent child abuse.
Yahoo! UK Services Limited has been fined £250,000 by the Information Commissioner’s Office (ICO) following a cyber-attack in November 2014. The incident was publicly disclosed in September 2016, almost two years after it had taken place.
Fundraising Regulator annual event
The FR’s annual review event will take place from 9.30am to 11.00am on 18th July at Central Hall (Donald English room) Storey's Gate, Westminster SW1H 9NH. It offers an opportunity for the audience to ask the FR’s Board questions about its work, and looks back at the work of the Fundraising Regulator team during the 2017/18 financial year for its upcoming Annual Review. Members of the public can email Barbara.Arnold@fundraisingregulator.org.uk to book a place to attend, places are limited.
New member of FR Board
Kieron James is to be appointed a Board Member for a term of 3 years. The FR says he brings a new area of expertise to the Board, having founded Wonderful Organisation, an online fundraising platform. Prior to this, James founded WHYPAY?, the free telephone conference service, and he has decades of experience in the IT sector.
The Government has published its response to an Advisory Group’s report titled “Growing a Culture of Social Impact Investing in the UK”. The Advisory Group, commissioned by the government and led by Elizabeth Corley (vice chair of Allianz Global Investors), listed a series of recommendations to which the government has responded. Briefly, the government:
- Reports that good progress is being made. It considers financial services to be key, and cites a number of social impact funds launched in the UK since the start of 2018. Government commits to working with the investment and savings industry to support the launch of further such funds.
- Supports the increasing number of businesses that wish to embed social and environmental purpose alongside profit motive. It cites its encouragement of Purposely, an online tool to help entrepreneurs embed purpose into core governance documents when founding new companies.
- Plans to assess early impacts of recent changes to company reporting, including the transposition of the EU Directive on Disclosure of Non-Financial and Diversity Information. BEIS will lead an evaluation of company reporting on social and environmental issues and consider with the FRC what further action may be necessary.
- Will, as part of its corporate governance reform package, introduce changes to section 172 of the Companies Act 2006 to improve businesses’ reporting on their impacts on employees and other key stakeholders.
- Proposes other regulatory changes, including ensuring that environmental, social and governance factors are properly considered in pension investing.
- Encourages the FCA to build on its work on sustainable and green finance and to consider actions to reduce perceived barriers to the growth of the social impact investing market.
The government has launched a consultation on giving members powers to hold their pension schemes to account over how social and environmental factors impact their investments. Under new draft government regulations published this week, trustees will be required to produce a policy which includes an assessment of the sustainability of their investment decisions. This policy will need to be available to members so that they can make their own assessment of efforts to combat various risks, including climate change, poor corporate governance and socially harmful practices. More than £1.5 trillion is invested by occupational pension schemes on behalf of millions of savers across the UK and an additional £40 billion was invested in 2016/17 and under automatic enrollment.
At the 4th AGM and Conference of the Green Bond Principles, ICMA published updated versions of the Green Bond Principles, Social Bond Principals and Sustainability Bond Guidelines. It also published a number of key documents to complete the Principles. These are available on ICMA’s website.
The Ministry of Housing, Communities & Local Government has published two letters, addressed to local authority and housing association chief executives, outlining funding arrangements for the removal of Aluminium Composite Material cladding (ACM cladding) on council-owned residential buildings.
Funeral plan market
The government is seeking evidence on the current funeral plan market, potential customer detriment in the sector and ways to improve how the sector is regulated. The consultation closes on 1st August.
The draft Companies (Miscellaneous Reporting) Regulations 2018 have been published. The regulations, if approved by Parliament, will:
- Require companies which are obliged to prepare a strategic report (other than medium sized companies) to include a statement describing how the directors had had regard to the matters set out in section 172(1)(a) to (f) Companies Act 2006 when performing their duty to promote the success of the company under s 172(1). The factors listed in s 172(1) include the interests of the company’s employees, the impact of the company’s operations on the community and the environment, and the desirability of the company maintaining a reputation for high standards of business conduct. The regulations include detail about what must be included in the statement. Unquoted companies must make the statement available on their website.
- Require quoted companies with more than 250 UK employees to report on pay ratio information.
- Close a gap in the Community Interest Company regulations by requiring CIC reports to include information about director remuneration and benefits.
The Department for Business, Energy and Industrial Strategy has also published a set of draft Q and A to accompany the draft regulations.
The Financial Reporting Council has issued a draft of the Wates Corporate Governance Principles for Large Private Companies for consultation. The Principles are designed to help companies comply with the new regulations, although the group drafting the principles hopes that they will help smaller companies understand and apply good corporate governance practice. The consultation draft is available here and the accompanying press release here. The consultation closes on 7 September 2018.
OSCR’s latest blogpost is on the topic “Common Reporting Standard - does it apply to you?”, written by Laura Anderson, OSCR’s Head of Professional Advice and Intelligence.
OSCR is running a consultation on its draft British Sign Language (BSL) Plan which sets out the actions it intends to take to promote and support BSL users (including tactile BSL) from 2018 to 2024.
CCNI has announced that it is issuing text message alerts to 843 trustees of registered charities in Northern Ireland which are due to submit their annual reporting information by the end of June 2018. As at 12 June 2018, 131 charities due to submit by 30 June 2018 had done so, with 278 charities still to submit.
Posted on 20/06/2018 in Legal UpdatesBack to Knowledge