Handling a Charity Commission Statutory Inquiry | LegalDocuments.co.uk

Overview

A statutory inquiry is the Charity Commission's most formal investigatory mechanism, opened under section 46 of the Charities Act 2011. It is reserved for situations where the Commission has real concerns about how a charity is being run, whether that involves suspected misconduct, mismanagement, risk to charitable property, or a serious breach of trustee duties.

Opening an inquiry gives the Commission access to a wider range of regulatory powers than informal engagement or a compliance case. These can include protective powers such as freezing bank accounts, suspending or removing trustees, appointing an interim manager, or directing how assets are dealt with.

An inquiry can be wide-ranging or narrowly scoped, and the Commission usually publishes a final report setting out its findings and any regulatory action taken. An inquiry is not a criminal prosecution, but the information gathered may be shared with other agencies such as HMRC, the police or Companies House where appropriate.

For trustees, the priority is usually to cooperate fully, take proper minutes, and make sure decisions during the inquiry period are defensible.

Key steps

1. Read the opening letter carefully and identify the scope. The Commission's opening letter will set out why the inquiry has been opened, the issues it covers, and what cooperation is expected. Share it with every trustee, diarise any deadlines, and resist the temptation to respond immediately. Understanding the scope is the foundation of a proportionate response and stops the board from volunteering information on matters that were never raised.
2. Hold a dedicated trustee meeting and record everything. Call a formal trustee meeting focused solely on the inquiry. Agree who will act as the main point of contact with the Commission, how information requests will be handled, and how conflicts of interest will be managed, particularly where individual trustees are personally implicated. Detailed minutes of this meeting, and every subsequent one, are vital evidence that the board is exercising its duties responsibly.
3. Gather and preserve documents promptly. The Commission will typically ask for governing documents, minutes, financial records, bank statements, policies, correspondence and contracts. Put a document preservation approach in place immediately so nothing is deleted or overwritten, including emails and messaging app content. Organise material logically before sending it, and keep a clear record of exactly what was disclosed, when, and to whom.
4. Cooperate openly while protecting the charity's interests. Trustees have legal duties to cooperate with the Commission, but cooperation does not mean abandoning judgement. Respond to requests accurately, flag any legal privilege or third-party confidentiality issues, and ask for reasonable extensions where the volume of material requires it. If protective orders are proposed, such as suspending a trustee or freezing an account, understand your right to make representations before they are finalised.
5. Plan for the published report and any follow-up action. Most inquiries end with a published report and, sometimes, an action plan or regulatory directions the charity must implement. Start thinking early about governance improvements, policy gaps and training needs that the report is likely to highlight. Addressing weaknesses during the inquiry, rather than waiting for the final report, almost always produces a better outcome and reassures beneficiaries, funders and the public.

Common questions