Hansard

I hope that Linda Fabiani does not think that I am pursuing an entrenched position. The discussion is interesting because there is not a hard position on either side. We are all wrestling with the same difficulties. For what it is worth, my preferred position is for neither of the amendments to be agreed to, but I recognise the strength of feeling of the movers of the amendments and I recognise that there is some gathering of support around Scott Barrie's amendment. I will go through some of the issues that have been highlighted in the debate.It is important to recognise the issue about deterring volunteers. We do not want to inhibit or dissuade people from becoming charity trustees. Doing anything that would result in that would be contrary to our position of having a flourishing charitable sector. However, people must understand that responsibilities accompany being a charity trustee and that people who do not take those responsibilities seriously face consequences. We are trying to strike a balance.Some of the discussion is about the meanings of mismanagement and misconduct. Linda Fabiani argues that a layperson's view is that mismanagement is different from misconduct, but I am not sure how generally accepted that distinction is, because I do not make that distinction. I do not know how out of step I am with the rest of the world on that.Even if that were the layperson's view of those words' meanings, we are dealing with legislation, so we must consider the legal interpretation of the bill. As we have said, the definition of misconduct has been discussed from the beginning. We touched on it again last week when we debated amendment 149 and I wrote to the committee about the matter. I hope that the letter was helpful, but I suspect that for some it was not.Amendments 5 and 159 would limit the definition of misconduct to exclude the possibility of OSCR taking action when charity trustees or managers have made a minor mistake. That position is well motivated, but neither amendment would achieve the intended result.The dictionary definition of misconduct—I know that it might not help—includes conduct that is illegal, unethical, immoral and bad management. The definition in section 103 merely confirms the understanding that mismanagement can also be misconduct. However, more important for the purpose of the discussion is the fact that neither expression conveys any sense of whether conduct or management was deliberate or in error, or of whether a problem was a one-off or was persistent, which members tried to get at. Intent was the concern. One act can look the same as another but what motivated a person's behaviour and whether the conduct lasted for a period can change our perception.The amendments would exclude minor mismanagement from the meaning of misconduct or limit the meaning of misconduct to gross mismanagement, but that would not exclude all minor errors from the definition of misconduct. For example, if a charity failed to lodge its accounts on time, that would still be misconduct, whatever the reason for the failure. Neither amendment would change that.However, the amendments could undermine the effective regulatory regime for charities that the bill tries to establish. I know that nobody on the committee wants to do that. That is especially the case when the amendments are read with amendment 149, which was agreed to last week. As the independent regulator, OSCR must have appropriate powers to take action in cases of misconduct and the discretion to decide when to use them. Equally, a penalty must be able to be imposed for breach of duties by charities and trustees, or the regulatory regime will lack bite and OSCR's role will be devalued to being advisory rather than directive. For that reason, a breach of any duty should also be a breach of the law.Most existing charities and their trustees are expected to continue to act responsibly and in accordance with the new provisions. However, the unscrupulous might use the dilution of a strict duty as an avenue to excuse their misconduct. That may be the point that Mary Scanlon suggested. Such an outcome would be unfortunate, and neither existing charities nor the general public would be likely to view that as a welcome development.OSCR and the court must be able to take appropriate action under sections 31, 32 and 34 in the event of apparent misconduct. After investigation, OSCR should be able to decide whether regulatory action needs to be taken. That will depend on the seriousness and impact of a case. I expect OSCR to consider several ways of dealing with misconduct. According to the circumstances, OSCR may consider a simple reminder of the threat of regulatory action to be a more appropriate course of action.However, amendments 5 and 159, together with amendment 149, would require OSCR to take a three-step decision before proceeding. First, OSCR would have to establish whether non-compliance or a breach had taken place. Then, as a result of amendment 149, OSCR would have to consider whether non-compliance by a charity or charity trustee was misconduct. Following from amendments 5 or 159, it would have to judge whether mismanagement was minor. Only then would OSCR be able to take regulatory action. That process is complex and could cause unnecessary delay. It would also import uncertainty into the regulatory regime for OSCR, charities and charity trustees. The amendments could obscure the standards that are expected and make the provision of guidance unduly complicated. Transparency would be lost and OSCR's efficiency could be compromised. As a result, the public could fail to find the reassurance that they seek in the system. None of us would view such an outcome as satisfactory.The motive behind amendments 149, 5 and 159—which I understand and support—appears to be to ensure that minor breaches of trustee duties do not automatically attract the full weight of OSCR's regulatory power. In previous meetings, we have spoken about the need for OSCR to act reasonably, but there might be merit in saying again that, although its powers will be far reaching, as a public body it must act in a way that is both proportionate and justifiable. In addition, all OSCR's decisions will be subject to review and appeal. It will not be able to take any action without the need to be proportionate coming into play. Perhaps we should consider making that clearer. OSCR's reasonableness and its responsibility to be reasonable is a key issue, and that addresses concerns about people who have made mistakes triggering the full weight of OSCR. That is not the intention of the framework.I have looked back at the discussions on the concerns that motivated the amendments and am aware of the part that has been played by the fact that section 65 provided that breaches of some charity trustee duties were offences. Therefore, I remind members that we have amended the relevant section and removed those offences. In doing so, we envisaged an approach whereby the consequence of breaching a section 65 duty would not automatically result in an offence, but such a breach would instead be considered to be misconduct and, if necessary, it would be open to OSCR to take one or more of the actions that are set out in section 31 of the bill.As I said in my letter, we will need to revisit the full implications of amendment 149 at stage 3. In doing so, we will seek to find a way of addressing the committee's concerns without compromising the efficiency of the regulatory regime. Far from there being entrenched positions, we are all seeking an ultimate position on which to agree. We are balancing interests in wanting to involve charity trustees but not wanting to be over heavy on them in managing a regulatory regime.On what Christine Grahame said, my letter states that it would be unlikely that OSCR would take action, but it will be independent of the Executive. Equally, its actions must be proportionate and reasonable.I have said that I recognise the commitment of Scott Barrie and others on the issue and I have indicated the Executive's preferred position. Whatever the outcome of the debate, I commit the Executive to further discussions on how we can reach at stage 3 a satisfactory conclusion with respect to amendment 149 that maintains the regulatory regime and does nothing to harm the strength of the charitable sector.