The campaign group behind the advertising boycott of GB News is being summoned to see a government regulator and will be "monitored" following claims that it breached company laws by engaging in "political activity".
The directors of Stop Funding Hate, which is registered as a Community Interest Company (CIC), are being called to a meeting with the CIC regulator over allegations that it has taken part in political campaigning.
The move comes after ten Conservative MPs called for an investigation into the group, which they said advocates a "cancel culture" by pressuring firms into pulling advertisements from the new broadcaster and several tabloid newspapers.
A CIC is a type of firm intended to "benefit the community". The structure is designed to make it easier for groups to attract charitable donations, but CICs must not be formed "for political purposes" and any political activities "should be closely related to the non-political community benefit activities which they are set up to carry out."
In a response to the MPs' complaint, Louise Smyth, the CIC regulator, said that the company's activities had not breached the relevant regulations.
But she added: "Considering the concerns you have raised on behalf of your constituents in line with the above regulations I will be contacting the directors of Stop Funding Hate and requesting a meeting to discuss this matter further.
"I will be seeking reassurances that the company will continue to operate in the spirit of the original vision of CICs."
Ms Smyth added: "I take any breach of CIC regulations seriously. Due to the concerns you have raised, I have directed my team to monitor the situation and should there be any breach of CIC legislation I will not hesitate to act accordingly."
'An affront to democracy'
Brendan Clarke-Smith, one of the signatories of the letter to Ms Smyth, and a member of the Common Sense Group of Conservative MPs said: “It’s a relief that the regulator has acknowledged our concerns, and that they have requested a meeting with the directors of Stop Funding Hate to discuss this further.
"The actions of this group and its attacks on free speech are not only an affront to democracy, but have undermined the trust that many people might have had in Community Interest Companies - most of which do such important work.
"Ministers should now work to strengthen existing regulations to ensure that in the future these fringe groups are unable to exploit loopholes in this cynical way.”
In letters to Ms Smith and Kwasi Kwarteng, the Business Secretary, last month, the Tory backbenchers claimed that Stop Funding Hate "has been exploiting the prestige that is afforded by CIC status, and the privileged access that CICs have to many grants of taxpayers money, for overtly political means."
In June, it emerged that The Joseph Rowntree Charitable Trust had given £50,000 to Stop Funding Hate.
The charity said the sum was a "a restricted grant" for a project "to encourage responsible media through an ethical advertising code", adding that it takes "great care with our grant-making and we carry out detailed due diligence and monitoring".
Official guidance states that a CIC may "engage in political activities if its engagement in them can reasonably be considered as incidental to activities which a reasonable person might consider are carried on for the benefit of the community, and which are not themselves incidental to political activities. For example, a CIC that uses a community centre for activities, which benefit local people, may be able to lobby local government for a grant to improve the facilities available in the building."
Stop Funding Hate describes itself as a "community-driven campaign" whose "supporter community includes people from across UK society, united by a shared commitment to overcoming hatred and challenging all forms of discrimination". Its goal is "to make hate unprofitable".
But, in their letters the MPs stated: "Rather than advocate on behalf of a group in society Stop Funding Hate are doing the exact inverse of what CICs are permitted to do. They are proactively advocating against a group in society, namely the hundreds of thousands of people who tune into GB News every day, and the 60 per cent of the population who do not want to see brands engage in cancel culture of boycotts of TV stations."
Last month, following this newspaper's report on the MPs' letter, Stop Funding Hate asked supporters on its Facebook group to follow a series of rules including refraining from posting comments which "promote any political organisation or campaign".
On Saturday, Richard Wilson, the director of Stop Funding Hate, said: "This is not the first time that vexatious complaints have been made about Stop Funding Hate’s work. However we have received no correspondence from the CIC Regulator in relation to these latest claims.
"Stop Funding Hate is a non-political human rights organisation working to build a better media through the promotion of ethical advertising. All of our activities have been fully consistent with the law, and any suggestion to the contrary is wholly unfounded."