New curbs on the charity 'muggers'

Charity collectors faced tough government curbs today after complaints that they hassle pedestrians and mislead donors about where their money goes.

The clampdown applies to " charity muggers", known as " chuggers", who stop people in the street to ask for direct debit pledges.

A powerful code of conduct will ban collectors from stepping in front of pedestrians to force them to stop.

In addition, a new licensing regime will allow councils to bar charities from certain streets at particular times to stop overcrowding. The collectors will also be forced to tell would-be donors exactly how much from each gift goes to charity, and how much to the professional firm running the operation.

Ministers are closing a loophole which allows chuggers to operate without regulation because they do not collect cash.

The measures were unveiled as the Home Office published its draft Charities Bill to update the way the voluntary sector is regulated. The code of conduct will be voluntary at first, but will be made legally binding if widely ignored.

More than 100 charities collect donation promises on the streets of Britain.

Last year they signed up 700,000 people to pledges worth £ 240million. However, half cancelled their

direct debit mandates within 12 months of signing up.

Under current law the collectors are supposed to point out that a proportion of each gift goes to the chugging company, but the rule is often ignored.

Collectors are paid for their work. It costs the companies about £100 a day to put each collector out on the streets. In less than five years chugging has become big business, generating fees running to tens of millions of pounds annually.

The companies make hundreds of thousands of pounds of profit from the growing industry of "face-to-face" recruitment.

The firms enter contracts with charities to raise funds on their behalf. They typically charge the charity between £40 and £60 for each person signed up to a direct debit monthly donation.

Last year an estimated 690,000 people were persuaded by chuggers to give financial support to a charity, according to the Public Fundraising Regulatory Association.

At an average fee of £50 per sign-up, that suggests £ 34.5million of donations going as income to the businesses.

Donors are often unaware that the first 10 months on a typical £5-a-month direct debit will benefit a company.

Five private companies behind the bib- wearing recruiters are the Dialog Group, Push, Gift Fundraising, Caring Together and Fruitful Fundraising UK.