Twenty-Eighth Report - Student loans issued to those studying at franchised higher education providers

DfE recognises that the franchising model creates risks, given it encourages providers to do new things, but accepts that some lead providers have not taken their responsibilities for governance and safeguards in their franchised providers as seriously as within their … Read more DfE recognises that the franchising model creates risks, given it encourages providers to do new things, but accepts that some lead providers have not taken their responsibilities for governance and safeguards in their franchised providers as seriously as within their own institutions.33 The regulatory framework relies on lead providers’ controls over franchised providers. They have responsibility for ensuring franchised providers have adequate controls to mitigate the risk of student loan funding being paid out inappropriately.34 DfE emphasised to us that it has told lead providers they have a clear responsibility in respect of fraud or misuse of funds at their franchised providers. DfE added that OfS has written to them and met with the chairs of audit committees and vice-chancellors.35 OfS told us it can strengthen how it expresses its management and governance requirements, making clearer lead providers obligations for good and effective controls over franchises.36 More widely, evidence from the Office of the Independent Adjudicator is that many franchisees are not always fully aware of their responsibilities, and that there needs to be a better understanding of terminology, responsibilities and roles in franchise relationships.37 Show less

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There is no statutory or regulatory obligation on franchised providers to register directly with OfS. The lead provider retains responsibility for a franchised provider’s compliance with academic quality, financial sustainability, governance and accountability standards. In 2021/22, 229 (65%) of the … Read more There is no statutory or regulatory obligation on franchised providers to register directly with OfS. The lead provider retains responsibility for a franchised provider’s compliance with academic quality, financial sustainability, governance and accountability standards. In 2021/22, 229 (65%) of the 355 franchised providers were not registered with OfS. However, there were instances where OfS had not approved providers’ applications to become registered, but those providers subsequently went on to provide courses, as unregistered providers, through franchise arrangements.38 OfS confirmed that it had refused registration to around 20 providers, of which it could identify two now operating as franchise providers. Other franchised providers had started to seek registration but withdrew before OfS had reached a decision on their registration.39 OfS added that it is ‘very interested’ in internal management and governance controls within lead providers, particularly where delivery providers are not registered, and that it recognised it could strengthen regulatory requirements.40 Show less

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DfE told us that even if a provider could not meet all the registration criteria it might still be a good franchisee. DfE recognised, equally, that if providers do not pass that threshold, it would be right to question them … Read more DfE told us that even if a provider could not meet all the registration criteria it might still be a good franchisee. DfE recognised, equally, that if providers do not pass that threshold, it would be right to question them providing a service for students.41 DfE told us that it is actively considering whether to impose additional controls, such as requiring all providers to be registered with OfS.42 Universities UK, in written evidence, broadly 33 Q21 34 C&AG’s Report, para 15 35 Qq18, 53, 59 36 Q57 37 Office of the Independent Adjudicator for Higher Education (ISL0003) 38 Qq56, 71 39 Qq71–72 40 Q54 41 Q59 42 Qq37–38, 56 Student loans issued to those studying at franchised higher education providers 13 supported this proposal, saying that this additional regulatory oversight would provide further assurances, not only to students and the public, but also to universities when they are looking to identify providers to work with.43 Show less

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Between 2018/19 and 2021/22 the number of franchised providers increased 6%, but the number of students attending them more than doubled from 50,440 (2.5% of all students) to 108,600 (4.7% of all students). Some 63,680 (59%) of the 108,600 students enrolled on business and management-related courses. The increase in students …

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