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Education e-briefing - OfS Regulatory Powers

  • United Kingdom
  • Education - Briefings

19-03-2018

Following the Office for Students (OfS) issuing its new regulatory framework for HE in England on 28 February 2018, entitled Securing student success: Regulatory framework for higher education in England (the Framework) many providers will be preparing to apply for registration from 3 April 2018. If OfS registration is not achieved by 1 August 2019, providers will not be able to access the student support system or receive grant funding for higher education.

Many institutions within the sector are still “getting to grips” with the wide ranging powers the OfS will have under the Framework. Those powers are likely to shape the landscape of the HE sector for years to come and the decisions made by OfS will be of critical significance for all institutions operating in the sector.

Institutions will need to understand what guidance is available about how those powers will be exercised and what the options might be if the worst happens - the OfS makes a decision which could have unfavourable implications.

The OfS’ Remit

As we explained in our briefing of 28 February 2018 the Framework confers wide ranging regulatory powers upon OfS.

• It establishes a new requirement that any HE provider must register with the OfS as either an Approved or Approved fee cap provider if it wishes to access public grant funding/ student support funding; apply for research council funding; apply to the Home Office for a Tier 4 licence to sponsor international students in England or to maintain an existing licence; and apply for degree awarding powers and/or university title. 

• The Framework sets out a series of initial registration conditions – or “baseline requirements” which the OfS must be satisfied have been met before it will allow an HE provider to join the register.

In addition, the Framework states that an institution must be able to demonstrate that it can satisfy the initial and ongoing conditions of registration in its own right. Normally this will entail the provider demonstrating the following characteristics - its own name and brand identity; a clearly distinguishable student body; its own distinct governance structure and governing documents; not being under the control of another entity which is itself registered or has applied to be registered with OfS; and separate, distinguishable finances that allow for the identification of the institution’s income and expenditure, balance sheet and cash flow. If a provider cannot demonstrate that it has all of these characteristics, the Framework says it is unlikely to meet the eligibility criteria for registration but, if it satisfies the majority of the characteristics, OfS will consider whether an exception should be made, so that the provider can be registered.

• After registration each initial condition will become a general ongoing condition of registration. In addition the Framework sets out 12 further conditions most of which will apply to both Approved and Approved (fee cap) providers unless OfS decides that particular conditions can be dis-applied – which it has power to do on a case by case basis.

• Providers with existing degree awarding powers do not need to apply to the OfS to retain that authorisation. However any provider who is not currently authorised to grant degrees will need OfS authorisation to do so.

• The Framework establishes a risk based approach to the exercise of the OfS’ regulatory powers, allowing it to focus its monitoring activity on areas of increased risk by undertaking:

o Risk assessment at the point of registration;

o General monitoring (triggered by lead indicators, reportable events, other intelligence e.g. whistleblowing and complaints);

o Enhanced monitoring / engagement (where an increased risk or suspected/actual breach of ongoing conditions is identified);

o Random sampling of providers (this is not intended primarily to reassess risk for a provider, but will provide additional provider level information about risk);

o Efficiency studies (Where monitoring or random sampling raises concerns about a provider’s efficiency);

o Monitoring for wider purposes (to monitor financial sustainability or student transfers)

• The Framework also give OfS powers to intervene where it considers there has been a breach of an ongoing condition of registration or it perceives that the risk of a breach is increased. Those powers of intervention are significant and include the power to:

o enter and search

o impose specific ongoing conditions of registration

o impose monetary penalties

o vary and revoke degree awarding powers or the university’s title

o suspend registration

o de-register

How will the OfS exercise its powers?

These wide ranging powers of intervention highlight the very serious implications for any institution which is perceived by OfS as falling short of the regulatory framework. What guidance is currently available to help an institution understand how the OfS is likely to approach the exercise of its powers?

The Framework sets out four primary, overarching regulatory objectives which will underpin the way in which - as a matter of general principle – the OfS intends to perform its functions. The OfS will ensure students:

1. are supported to access, succeed in, and progress from, higher education;

2. receive a high quality academic experience, and their interests are protected while they study or in the event of provider, campus or course closure;

3. are able to progress into employment/further study, and their qualifications hold their value over time; and

4. receive value for money.

The Framework also provides considerable specific guidance about the criteria which will be applied by OfS in deciding whether the conditions of initial and then on-going registration have been met.

Whatever decisions the OfS makes, must be consistent with its stated objectives and the guidance contained in the Framework. Beyond the detailed wording of the Framework document, any decision taken by OfS must also comply with any general directions or further guidance issued by the Secretary of State for Education and to the terms and conditions attached to any grants it receives from the Secretary of State.

More broadly, as a regulatory body exercising public law functions it must also meet the public law principles of fairness, transparency, proportionality and consistency with the legal and policy framework within which it operates. As we have highlighted, one of the policy principles embodied in the Framework is also that the OfS will adopt a targeted approach, focusing on those cases/institutions in which action is needed.

What can an institution do if it is concerned about the way OfS is exercising its powers?

Institutions will generally wish to work collaboratively with the OfS and to respond positively to the new regulatory regime. Challenging a decision of the OfS is likely therefore to be the remedy of last resort.

Nevertheless, some of the sanctions are very significant indeed. And it is likely to be a matter of potential concern to an aggrieved institution that, if sanctions were to be imposed, that information about them could be published by the OfS – with all the reputational implications that may have. Any institutions faced with the prospect of significant financial consequences and adverse publicity arising from a OfS ruling may therefore wish to consider the avenues available to contest that decision.

In some cases, the Framework builds in a formal mechanism for appeal. Before making a final decision on whether to refuse or suspend registration, impose a monetary penalty, or deregister a provider, the OfS must provide the governing body with a period of time (not less than 28 days) to make representations against the OfS’ reasons for its prospective intention to make a decision in this regard. The providers’ representations will be taken into account before the reasons for the final decision is confirmed.

If the provider is unhappy with a final decision to deregister or impose a penalty or the amount of a penalty, then the provider can appeal to the First Tier Tribunal on the basis that the decision is either based on factual error, is wrong in law or unreasonable. The success of such an appeal will be based on the evidence that the provider can gather that justifies the grounds for appeal which are being pursued. Following an appeal, the Tribunal may either withdraw the OfS’ decision, confirm or vary it or remit the decision on whether to confirm the decision or any other matter relating to that decision back to the OfS.

Many of the decisions made under the Framework, do not however require the OfS to provide a representation period or right to appeal before the Tribunal. It may instead be permissible in the future, for a provider to seek redress under an OfS complaints procedure. Such a mechanism may however not provide adequate redress for the institution who faces considerable reputational damage (and perhaps financial harm) as a consequence of a decision of OfS.

It may not for instance, entitle an institution to require that the OfS delay publication of any information whilst the complaint is considered (for example assessment of the quality and standards of the provider which will be undertaken by the Designated Quality Body – the QAA - (details of how this will be undertaken are yet to be fully established) or information relating to sanctions imposed).

If all these routes to appeal fail – or do not exist for the particular complaint, the institution’s only redress will be to seek to challenge the decision by way of judicial review proceedings. In appropriate circumstances those proceedings could be coupled with an application for an interim injunction to prevent publication of the OfS decision in the meantime.

Whether grounds for a judicial review challenge exist will depend upon careful scrutiny of the OfS decision making processes. The critical issue will be whether what has been done falls foul of the public law principles of rational decision making, consistency with policy and guidance, transparency and fairness. In other words any judicial review application would not review the merits of the OfS decisions but focus rather on the process by which it has been reached. Nevertheless if a decision of the OfS falls short of those principles then judicial review could offer a remedy of last resort for an institution aggrieved by a ruling of the OfS.

Conclusion

Compliance with the obligations imposed by the Framework and in particular the initial conditions and ongoing conditions of registration will be absolutely vital to the future success of an HE institution in England.

Institutions will certainly want to embrace the new regulatory regime and work collaboratively with OfS to understand how they can best succeed and thrive in the new regulatory landscape.

There is no doubt however that, at their most severe, the sanctions available to OfS could have a very serious impact on the reputation or financial viability of an institution. For that reason any institution will also want to be clear about the parameters of OfS powers and the options for redress in the event that it faces an adverse OfS ruling.

The benefits to be achieved by challenging a OfS decision will always need to be weighed up against the impact this may have on the relationship with the OfS but ultimately, understanding what the options are and what the implications may be, will always be important if an institution is to achieve the best outcome for itself and its students within the new regulatory regime.

If you would like to seek any further information or advice please contact the following.

For more information contact

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