Charity Commission warns of threat of increasingly complex attacks exploiting weakness of regulatory overlaps

The Commission revealed in its second annual Charity Sector Risk Assessment that it had made almost 500 such disclosures of information.

The Commission fired a warning that “bad actors [are] attacking the sector via increasingly complex methods and sometimes exploiting overlaps between different regulators”.

It reported an increase in “particularly complex case work”, such as charities operating in fields where there are multiple regulators.

“Also identified in the assessment is the concern of that charity users may have little opportunity for redress if the quality of the services they receive is inadequate where subject-expert regulation is not enforced, including charities providing out of school settings and certain housing services,” the Charity Commission said.

The watchdog said that it currently has several open statutory inquiries regarding charities that provide supported housing. In total, these charities manage or managed around 5,000 supported housing properties.

It added: “Whilst we can tackle governance issues such as conflicts of interest and private benefit to trustees, we do not have either the expertise or statutory remit to regulate the service provision of these charities or deal with complex fraud. The Commission has raised these concerns with successive governments since 2019 and has welcomed steps taken to close the regulatory gap, particularly through the passage of the Supported Housing (Regulatory Oversight) Act 2023. However, the implementation of this legislation is severely delayed.”

The watchdog meanwhile highlighted a sustained increase in concerns raised about charitable status being abused for private benefit, with a 29% increase in 2025-26 (374 cases) following a 38% increase in 2024-25 (291 cases, up from 211 in 2023-24).

The risk assessment separately noted a number of wider risks facing charities, including those increased by rapid technological developments, with AI facilitating, for example, fraudulent applications to register a charity or apply for grants.

Paul Latham, Director of Communication and Policy at the Charity Commission, said: “The vast majority of charities are well run, making a positive difference to lives and communities every day.”

“However, our assessment highlights the growing scale and complexity of risks they face, including from those seeking to exploit charity status for personal benefit, and from a lack of regulatory clarity which potentially leaves service users exposed to poor services or harm.

“While proportionally relatively few charities are directly affected by such threats, their impact can be significant, for the individual charities, the Commission’s resources, and public trust and confidence in charities.”

Harry Rodd