Charity Commission board must take responsibility for “staggering” decision to sue Ombudsman, MPs say

In a report published on Tuesday (27 October), the Public Administration and Constitutional Affairs Committee (PACAC) criticised the Commission's board for being overly reliant on legal advice when deciding to pursue the challenge and failing to give sufficient consideration to the wider consequences.

The committee said it was difficult to understand how the Commission had reached a position where it believed taking legal action against another publicly funded organisation was its best course of action.

It also called for a wider review of the Commission's powers and how it exercises them, alongside a fundamental change in the regulator's culture and operational approach.

The findings follow a dispute over the Ombudsman's intention to lay two reports before Parliament concerning the Commission's handling of complaints involving serious safeguarding issues at two separate charities.

The Ombudsman had carried out separate investigations into the Commission's handling of the complaints and concluded in both cases that the complainants had suffered injustice as a result of maladministration.

It made a series of recommendations, including that the Commission review its communications processes and approach to risk assessments, as well as its risk assessments and regulatory decisions in the two cases.

An internal reviewer at the Commission subsequently examined both complaints and produced a 10-page report on each case. However, the reviews referred to “sensitive” reports that were referenced but not provided to the complainants.

The Ombudsman later issued a decision letter stating that it believed injustice remained unremedied in both cases. It also confirmed its intention to lay special reports before both Houses of Parliament pursuant to section 10(3) of the Parliamentary Commissioner Act 1967.

The Charity Commission then launched a judicial review challenge against the Ombudsman in May 2025.

In a decision published in March this year, Mr Justice Fordham refused permission for the claim, finding that it had become academic, should not be entertained and that the Commission’s legal arguments were unarguable.

PACAC subsequently launched an inquiry into the circumstances surrounding the legal action.

In its report setting out its findings, the committee said: "We find it hard to believe that the Charity Commission ever got itself into a position where it believed its best course of action was to pursue legal action against another publicly funded organisation."

The committee said the decision had considerable consequences, including significant costs to the taxpayer, additional and unnecessary work for the Ombudsman and, "most importantly", further upset and inconvenience for the two complainants at the centre of the reports.

The report also noted that the Commission had been found in contempt of Parliament by the Committee of Privileges.

Turning to the Commission's decision-making, the report said: "We were assured that the Charity Commission’s Board followed due process. However, it appears to us that the Board was overly reliant on the legal advice it received and did not take other considerations into account as effectively as it should have done: for example, it should have taken into account the possible reputational impact of taking legal action against another publicly funded organisation and the likely consequence of challenging the authority of Parliamentary Privilege."

It added: "In its evidence, the Charity Commission has repeatedly emphasised that the advice its Board received indicated legal action should be taken. Yet it was a Board decision to seek permission for judicial review, not a decision taken by the Charity Commission’s lawyers, and the Board must, ultimately, take responsibility."

Elsewhere, the committee rejected a number of claims made by the Charity Commission about the Ombudsman, including that it had acted beyond its remit and had asked the Commission to undertake a criminal investigation.

MPs also concluded that it was for the Ombudsman alone to determine whether its recommendations had been complied with, rather than the organisation under investigation.

The report continued: "It is unquestionably not a matter for the judgement of the organisation under investigation. It is beyond belief that advisers to the Charity Commission, and the Charity Commission itself, ever thought otherwise."

The Government recently launched a consultation on strengthening the Commission's powers to respond to the extremist abuse of charities, including proposals to widen the criteria for disqualification to cover individuals who have engaged in extremist or hateful activity.

The committee welcomed the consultation but also called for a wider review of the Commission's powers and how it exercises them.

PACAC's chair, Simon Hoare, said: "The handling of these two highly sensitive cases by the Charity Commission Board should be exhibited as a shining example of how a public body should not conduct itself. A litany of poor decision-making has backfired horribly, leading to bad outcomes for everyone.

"We must not forget that poor handling of cases such as these has real life consequences. First, the individual complainants have been put through a further ordeal which need never have happened. Second, when cases such as these are mishandled, it shakes public trust that the system will support them if they are the victims of an injustice. The Charity Commission's legal action against the Public Service Ombudsman has done further damage to that trust and it is now the job of the Board to win that trust back."

Dame Julia Unwin, Chair of the Charity Commission, said: "The Board fully accepts the committee's recommendations. We have long accepted errors in how we approached the two cases investigated by the Public Service Ombudsman and have apologised to both complainants. We have also apologised unreservedly to Parliament for persisting with legal action in relation to the Ombudsman's reports.

"We have already introduced a number of changes to the way in which we assess risk and communicate with those who raise concerns with us. An independent review into the way in which we handled the two cases is also underway, led by former appeal court judge Sir Gary Hickinbottom. We stand ready to implement any recommendations from that review, and in doing so will reflect carefully on the Committee's findings."

Adam Carey