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Treasury’s report is a “missed opportunity” says CAF 09/07/09
 

By Claire Racine

The Treasury’s report, Reforming Financial Markets, is a “missed opportunity” to protect charitable funds, said Charities Aid Foundation chief executive, John Low.

While CAF welcomes the government taking proactive steps to improve regulation, “charities are still at risk from the inappropriate and complex eligibility criteria for compensation should their bank fail,” Low said.

CAF, which aims to help other charities and encourage and facilitate a culture of giving, presented evidence to the Treasury Select Committee on the collapse of the Icelandic banks and how this impacted on charities.

The Committee called for charities that lost funds to be fully compensated and CAF’s suggestion of a separate depositor class for charities was also endorsed in the Committee’s final report. Despite this, the suggestion was ignored by the Treasury.

Last August, CAF wrote to the Chancellor highlighting the issue of security of charitable banked funds within the context of the FSCS and subsequently wrote with the support of other sector bodies in April 2009. CAF has received no reply to either letter.

In the 176 page Treasury report, the Third Sector is only mentioned in two sections, “Strengthening the FSA’s work on financial capability” in chapter Supporting and protecting consumers and “Social investment” in chapter Competition and choice in financial markets. In the former, the entire line reads, “The FSA has a statutory objective to promote public understanding of the financial system; it fulfils this through its consumer education activity and specifically through the FSA’s National Strategy for Financial Capability, working in partnership with the Government, the third sector and industry,” which is really just a mention of the third sector and does not really talk about it at all.

The “Social investment” section talks about channelling investment to third sector organisations and discusses plans for a Social Investment Wholesale Bank which could “leverage additional private capital to support existing investors and lenders to the third sector.”

The suggestions from CAF, endorsed by the Treasury Select Committee, are nowhere to be found.

The Treasury’s report, Reforming Financial Markets, can be read in full at http://news.bbc.co.uk/2/shared/bsp/hi/pdfs/08_07_09_markets.pdf


 
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