Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Protections for students, in the event of providers facing financial distress, are not strong enough.
Conclusion
Protections for students, in the event of providers facing financial distress, are not strong enough. The OfS requires providers to have a student protection plan in place to address the risk of continuity of study for its students, but it has identified common weaknesses in them – including over-optimism about risks and weak refund and compensation policies. When initially registering providers, the OfS approved a number of student protection plans that it considered inadequate, so as not to delay registrations. During the pandemic, it found that it needed greater powers to intervene more quickly, and introduced a new condition of registration from April 2021 allowing it to issue directions to universities it considers at material risk of failure. However, the process of implementing a student protection plan, which the OfS described to us, appears to be reactive. Recommendation: The OfS should prioritise ensuring that all providers’ published student protection plans are fit for purpose and sufficiently clear for students to make confident, well-informed decisions about the protections universities are promising them.
Government Response
Not Addressed
HM Government
Not Addressed
3.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2023 3.2 The OfS’s focus has been ensuring that protections are as robust as possible in those providers which might face financial distress. This reflects the OfS’s risk-based approach by ensuring that regulatory action is proportionate and targeted where it is most needed, while also ensuring there is not unnecessary burden on providers with robust financial health. For this reason, the OfS introduced a new ongoing registration condition on 1 April 2021 (Registration condition C4 of the regulatory framework for higher education in England). This substantially strengthened its ability to ensure the rigour of a provider’s plans to protect students against the risk of the provider ceasing to deliver higher education. 29 3.3 Registration condition C4 means that where the OfS reasonably considers that there is a material risk of such a market exit, it can put in place a Student Protection Direction, with which the provider must comply, setting out detailed and rigorous planning and measures to protect its student body. These go far beyond what would be covered in a student protection plan. 3.4 The OfS also intends to begin discussions with the sector about its regulatory approach to protecting the interests of students, with a view to updating and revising the requirements where appropriate.