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Education Students Briefing: OFT report on Universities’ Terms and Conditions

  • United Kingdom
  • Education - Briefings

29-04-2014

In February 2014 the Office of Fair Trading published a report entitled Universities’ Terms and Conditions.  The report considered the fairness of institutions imposing academic sanctions where a student owes a non-tuition fee debt to a university. The OFT investigated the issue following a complaint from the National Union of Students regarding the contract terms used by some universities. The findings of the OFT report would also apply to FE Colleges where they  similarly apply academic sanctions for non payment of non-tuition fee debt. Although the OFT has now been replaced by the Competition and Markets Authority (CMA) the CMA will be considering the findings of the report and the OFT’s further report (March 2014) on its call for evidence on the higher education market, which also contains comments about the fairness and reasonableness of the conditions in some universities’ student contracts. See our briefing on the March report accessible here.

Students are consumers – fair terms

As is very well understood, the relationship between a student and the university or college they attend is governed by contract law.  Under the “student contract”, institutions provide educational, pastoral and ancillary services to students as a business.  The services are usually provided on standard, non-negotiable, terms.  Each of the terms a university seeks to rely upon must be fair and reasonable and comply with consumer protection legislation.  As a consequence any sanctions imposed should be proportionate and referable  to the debt that is owed. 

The OFT’s concerns

The OFT concluded in its report that the blanket “use of and reliance upon contract terms that allow the university to withhold graduation or academic progression, or otherwise to exclude students from tuition for non-payment of ancillary services…… [for example accommodation and childcare] is open to challenge”.  These terms could potentially be unfair under the Unfair Terms in Consumer Contracts Regulations (“UTCCR”) 1999 and/or may be unreasonable under the Unfair Contract Terms Act 1977. 

In its report, the OFT highlighted concerns about how such terms are applied in practice.  The application of academic sanctions for non-academic debts (such as small library fines) could, according to the OFT, be “disproportionate” and may also be an “aggressive commercial practice” under the Consumer Protection from Unfair Trading Regulations 2008.

Whether such terms are in breach of consumer legislation, and consequently unenforceable against students, is ultimately a matter for the court.

Although the OFT has identified concerns about using academic sanctions to enforce non-academic debts, the OFT has closed its current investigation without taking any action.  The OFT’s report makes it clear that it wants to see institutions acting more promptly to prevent students incurring non-tuition fee debt and seeking to recover such sums under prescribed debt collection processes or court proceedings.  The OFT will continue to monitor how the HE sector responds to its report and any complaints it receives, but has made no immediate proposal to bring any enforcement action against any institution. 

Practical steps

In view of the OFT’s conclusions, it would be prudent for FE and HE institutions to review their contractual arrangements with their students and their processes for contracting (particularly in respect of student contracts entered into on-line, by telephone or by post) to ensure that at, the very least, the student contract:

  • sets out the respective rights and obligations of the university/college and the student, in a way which is clear and comprehensible to students; 
  • reflects the procedures followed by the institution when dealing with students; 
  • includes as contractual terms only those promises to students which the institution can deliver; and
  • includes only terms which are drafted as fairly and reasonably as possible; checking in  particular:
    • the terms of its disciplinary and debt recovery policies;
    • that the sanctions applicable under those policies are proportionate and applied proportionately in practice; and
    • that academic sanctions are not routinely imposed for low level non-tuition fee debt.

Having a fair and reasonable contract, drafted in clear terms and made available to students at the appropriate stage of the admission process ensures that students know both the expectations they can reasonably have of the institution and their own obligations, as well as minimising the risk of challenge by the OFT.

Imminent changes to the UK consumer law framework

Although we have not sought to cover the changes to the UK consumer law framework in this briefing, the HE/FE sector should be mindful of the changes that will shortly be taking place. For further information see our separate briefing on Students as Consumers accessible here.

For more information contact

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