The Law Commission published its report on Technical Issues in Charity Law in September 2017 following a public consultation.
It has been an exciting quarter, with a number of this year’s highly anticipated “key dates” fast approaching, including the deadline for GDPR, the implementation of the Golden Share Regulations and the introduction of the new Value for Money Standard.
We also reflect on last year’s events including the Grenfell tragedy, by giving a brief overview of the interim Hackitt Report. In addition to some of the key highlights from the quarter, we have also prepared a spotlight piece on the execution requirements for a range of corporate entities.
Anti-Money Laundering Regulations
The Money Laundering Terrorist Finance and Transfer of Funds (information on the Payer) regulations 2017, which transpose the Fourth EU Money Laundering Directive into UK law, were enacted on 26 June 2017. The new regulations introduce a number of important changes due to the shift in focus to a risk-based approach to compliance, and create a number of new obligations. The regulations apply to all organisations operating in the regulated sector and so will apply to RPs who carry out regulated activities including “estate agency” work as an intermediary in property sales (e.g. private market sale and shared ownership sales to subsequent buyers) and providing lending.
The main changes introduced by the regulations include:
- Enhanced policies, controls and procedures that must be proportionate to the size and nature of the organisation.
- The requirement for risk assessments to be carried out across the whole organisation for each new customer and transaction.
- The appointment of a board member as a “nominated officer”, responsible for compliance with the regulations and who must be different from the existing Money Laundering Regulation Officer.
- Enforced penalties for non-compliance. Failure to comply with the regulations may face civil penalties or criminal prosecution.
- The same level of scrutiny for British-based politically exposed persons and foreign nationals without marking the individual as high risk due to their status.
- More onerous customer due diligence.
- A greater emphasis on establishing beneficial owners.
For a full copy of the Regulations please click here.
Fire Safety a ‘Call to Action’ – Independent review of building regulations and fire safety; interim report
This independent review, being conducted by Dame Judith Hackitt, was commissioned by the Department for Communities and local government in response to the fire at Grenfell tower. The interim report was published in December 2017 and can be found here. The National Housing Federation (“NHF”) has summarised the report which can be viewed here. It is expected that the final report will be published in spring.
The interim report findings are quite stark, with an overall conclusion that the current regulatory system for ensuring fire safety in high-risk and complex buildings is not fit for purpose. We summarise the key findings below:
- Regulation and guidance – The current regulation and guidance is both complex and unclear and needs to become more risk-based.
- Roles and responsibilities – There is a lack of clarity on the roles and responsibilities within the system and there must be a clear responsible duty holder for all sub-contracts.
- Competence - The means of assessing and ensuring appropriate levels of competence throughout the system are unclear and inadequate. People working on complex and high-rise buildings should have appropriate qualifications and experience.
- Process, compliance and enforcement - There is widespread deviation from the original design to what is actually built, without clear processes for authorising, reviewing or documenting change and requires a more consistent approach.
- Tenant’s voice and raising concerns - The route for the tenants' concerns to be raised and addressed is unclear and inadequate. Tenants need to be reassured that there is a system in place to maintain their safety in their homes.
- Quality assurance and products - Current methods for testing, certification and marketing of construction products and systems are not clear. There will be further consultation on whether product testing data should be made transparent.
Goodbye HCA, Hello RSH!
The investment and regulatory arms of the Homes and Communities Agency were renamed in January 2018. The investment functions have been re-branded as ‘Homes England’ and the regulatory functions are now undertaken by the ‘Regulator of Social Housing’ (the “RSH”). Following a consultation, a draft Order (The Legislative Reform (Regulator of Social Housing) (England) Order 2018) was laid before Parliament on 28 February 2018 and subject to approval, will establish the RSH as an independent body. It is anticipated that the Order will take effect in October. It is important to note that until the Order is officially enacted, Homes England and RSH both legally remain functions of the HCA.
The following website and contact details have been updated to reflect the rebrand:
- New website - https://www.gov.uk/social-housing-regulation-england
- New email address for regulation staff - email@example.com
- New email address for referrals and regulatory enquiries (RRE) - firstname.lastname@example.org
- New telephone number for enquiries - 0300 124 5225
October 2017 - Late Payment Reporting
Companies who fit the following requirements must now submit details of their payment practices twice a year. The companies who must comply, are those who meet two or more of the following thresholds. Two years before the publication of late payment information is required:
- An annual turnover of £36 million;
- A balance sheet total over £18 million; or
- On average, more than 250 employees.
Late payment reporting only applies to companies registered under the Companies Act 2006, so Community Benefit Societies are not affected.
March/April 2018 – Social Housing Pension Scheme
The valuation of the Social Housing Pension Scheme opened in September 2017 and is expected to announce its findings in March or April of this year. Any changes will not take effect until April 2019 but it is important to understand whether the changes will apply to your organisation.
6 April 2018 - The Government Auto Enrolment Pension Scheme
The auto enrolment pension scheme introduced last year will change in April. The minimum employer contributions will increase from 1% to 2%. This is set to increase again in April 2019 from 2% to 3%.
16 May 2018 – Deadline for the implementation of the Golden Share Regulations
The date for compliance is finally upon us. The Regulations came into force on 16 November (for further details of the regulations, please see our ebriefing from 19 September 2017). After 16 May 2018, your constitution must reflect the regulations to ensure transparency and compliance with the Governance and Financial Standard.
We are happy to advise on the best approach to liaising with local authorities and we also offer fixed-fee packages to amend your constitution to reflect the new regulations.
25 May 2018 – General Data Protection Regulations (“GDPR”)
By 25 May, all contracts with third parties should contain clauses which enforce the GDPR and references to the Data Protection Act 1998 will no longer be sufficient. The Crown Commercial Service has released standard clauses that are contained within the appendices to the Public Policy Notice titled “Procurement Policy Note – Changes to Data Protection Legislation & General Data Protection Regulation” which can be found here. As these are geared towards use by Central Government, local authorities and other public bodies, you may find our package of standard clauses to be of more use. We also offer tailored clauses if you require a more comprehensive review of the data protection provisions in your contracts.
The GDPR also places reporting obligations on organisations. Organisations are required to have a Data Protection Officer (in some circumstances) who is responsible for advising the organisation and its employees about their obligations to comply with the GDPR and other data protection laws. Further information about how the GDPR will affect organisations can be found on the ICO website.
Corporate Governance Code
The Financial Reporting Council has been consulting on its proposals to revise the UK Corporate Governance Code (the consultation closed on 28 February 2018). The proposed amendments aim to reflect the changes to the economic and social climate and also consider the Government’s response to the Green Paper consultation on corporate governance reform. It is anticipated that the revised code will be published this summer to apply to accounting periods beginning on or after 1 January 2019.
Spotlight – Execution Methods Refresher
The correct execution of documents is an area of increased importance for RPs after the introduction of the de-regulatory measures last April. This is particularly the case for charitable RPs whose Board members are required to ensure compliance with the requirements of Part 7 of the Charities Act 2011 (the “Act”).
The table here indicates the execution requirements for different types of documents under the legislation. The way in which your organisation is authorised to execute deeds will usually be set out in your constitutional document (i.e. your Rules or Articles of Association) – this should be checked first.
Disposals by registered charities - section 333 delegations and powers of attorney
The trustees (i.e. the Directors) of registered charities are also required to provide a signed certificate in relation to disposals confirming that they have complied with the requirements of Part 7 of the Charities Act 2011(the “Act”). The trustees are able to use section 333 of the Act to resolve that any two Directors (as trustees) can execute documents on behalf of all trustees. This includes the certificates to be given in relation to disposals, which are given by trustees in their personal capacity rather than on behalf of the organisation itself. The trustees can enter into a personal power of attorney to delegate this function to the appropriate people. If you are interested in putting such an arrangement in place or have any questions, please contact Gemma Bell.
If you have any questions on any of the topics within this update, please contact Catherine Simpson.
Changing charitable purposes and amending governing documents.
Charity registration financial thresholds.
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