OfS eyes tougher student protection as ‘market exits’ likelier

England’s regulator has called for stronger powers to protect students enrolled at institutions that are at risk of financial failure because of the coronavirus pandemic.

The Office for Students is consulting on changes to registration conditions that would give it the powers to force an institution it deemed “at risk” to put in place “a market exit plan” approved by the regulator.

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.

The forced implementation of a market exit plan – a special type of the already existing student protection plans – could also include ensuring that the institution makes arrangements to transfer students to courses at other universities and colleges or to award credit for partially completed courses and awarding qualifications where courses have been completed.

Other measures include archiving records so that students can access evidence of their academic attainment in the future and offering impartial information and guidance to students on their options.

As the coronavirus pandemic is likely to result in a significant loss of income for some providers, the OfS said it needed “to be able to intervene quickly and in a targeted way” if those institutions appear to be on the edge of financial failure. The existing regulatory framework does not allow the rapid intervention needed in these circumstances, according to the consultation document.

The OfS’ consultation comes after the UK government set out a number of conditions for any English universities seeking emergency loans as a result of the coronavirus crisis.

The government’s “restructuring regime”, which focuses on a shift towards science courses, greater emphasis on graduate outcomes and potential mergers, also will have the aim of “protecting the welfare of current students”.

Universities must already have a student protection plan in place, setting out what would happen to students should an institution or course close, in order to be registered with the regulator.

This is because the regulator’s policy position is not to intervene if an institution is at risk of exiting the market but only to protect students from “a disorderly exit”.

However, the OfS said it had identified numerous weaknesses with student protection plans – such as overly optimistic assessments of institution’s market viability and vague wording around what students would be entitled to should the institution close – so had intended to consult on strengthening its ability to intervene before the pandemic hit.

It has brought forward this element of the paused consultation because the possibility of a market exit by a provider had drastically increased in likelihood because of the disruption caused by the pandemic.

If the proposals are approved, this would be a permanent addition to the OfS’ regulatory framework, unlike other proposals put forward by the regulator to stabilise the sector during the coronavirus pandemic.

The new condition would come into effect in October 2020 but would not apply to institutions in good financial health.

Nicola Dandridge, chief executive of the Office for Students, said “nobody wants a university or college to run into financial trouble, but where this happens, it is vital that students are able to complete their studies with as little disruption as possible and receive proper credit for their achievements”.

“This proposed condition would ensure that we are able to act swiftly and decisively where there is a material risk of closure. We have been clear that, as a regulator, we wish to reduce unnecessary burden on higher education providers. For the vast majority of universities and colleges that are in a sound financial position, these changes will not have any effect,” she said.

“This is a carefully targeted and proactive measure to protect students, particularly during these uniquely challenging times. Where universities and colleges are at material risk of closure, we will ensure that our focus is on the needs of students.”

anna.mckie@timeshighereducation.com