New rules giving England’s regulator stronger powers to protect students enrolled at higher education providers at risk of closure have been introduced, despite opposition from the sector.
The new guidance allows the Office for Students (OfS) to require institutions that it deems at risk of failure to put in place a “market exit plan” approved by the watchdog.
This could include forcing the institution to continue to teach existing students before closing or enabling students to make complaints and apply for refunds or compensation.
A market exit plan – a special type of the existing student protection plans – could also require an institution to make arrangements to transfer students to courses at other providers or to award credit for partially completed courses and awarding qualifications where courses have been completed.
The OfS went ahead with the guidance – which comes into force on 1 April – despite a majority of respondents to a consultation expressing their opposition to it.
Of 83 respondents, 47 (57 per cent) said that they did not agree with the proposed guidance, and only 20 (24 per cent) supported it. Some respondents suggested that it could impinge on institutional autonomy, and raised concerns about the impact of the publication of a market exit plan on a provider that was already in difficulty.
The OfS said that it had amended the guidance to make it clearer following the consultation, but argued it was necessary because of weaknesses in existing student protection plans and the impact of the coronavirus pandemic on institutions’ finances. It said that market exit plans would only be published when that was judged to be in the public interest.
Susan Lapworth, the OfS’ director of regulation, said that universities should be “reassured that the scope of this power is narrowly focused on situations where closure is a credible possibility”.
“Even when we account for the impact of the pandemic, university finances are overwhelmingly in good shape. But there is increasing variation in financial performance across the sector, and we have had to intervene in a very small number of cases,” Ms Lapworth said.
“We have done so with one hand tied behind our backs because the existing regulatory tools have not allowed us to act quickly and effectively.
“The new condition ensures that – on the rare occasions where there is a material risk of closure – we can act to ensure that the interests of students remain paramount.”
