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Consumer Rights Act 2015 - students as consumers

VWV's Kris Robbetts discusses how the new Consumer Rights Act will impact on the HE institution / student relationship

Posted by Hannah Oakman | October 01, 2015 | Finance, legal, HR

A recent investigation by Which? into higher education providers' rights to change courses concluded that just over half of the institutions responding to its Freedom of Information Act requests used contractual terms which gave them an unacceptably wide discretion to change the service provided after a student had enrolled.

This is perhaps surprising given that existing legislation creates a range of remedies for consumers in the event that they are treated unfairly by a supplier business – or 'trader' as they are now known – during the performance of a service contract. These include damages for losses incurred through breach of contract or misrepresentation, the right of termination in the event of a repudiatory breach by the business (i.e. one which is sufficiently serious to excuse a party from the contract), freedom from the enforcement of unfair contractual terms and the interpretation of ambiguous clauses in favour of students (as consumers).

The apparent inadequacy of these remedies, combined with the need to rationalise existing consumer rights legislation, explains the impending arrival of the new Consumer Rights Act 2015 (the Act), which will come into force this October. The Act may not be set to revolutionise the relationship between consumers and businesses but it deserves attention because, in the continued absence of a standardised higher education student contract, it will further strengthen the position of students by creating additional remedies if services are not delivered by institutions with reasonable care and skill. There is also due to be a sector compliance check by the Competition and Markets Authority (CMA) shortly after the Act becomes law.

 Competition and Markets Authority Guidance

 The existing consumer-business regime within the context of higher education was recently reviewed by the CMA, which issued guidance on the minimum standards institutions must maintain in order to act within the scope of existing primary and secondary legislation.

The protection already in place for students covers pre-enrolment (the basis on which an offer of a place is made and accepted) and post-enrolment (when the contract is in place). At the pre-enrolment stage, the priority is to ensure that a prospective student is able to make a fully informed decision on whether or not to apply. This includes providing sufficient course- and non-course related information, such as programme structure and content, contact time, accommodation options and, of course, a breakdown of fees. It also includes ensuring that the information given is accurate, complete and clear.
Details should be captured and made available in a variety of ways.

 "Between now and October, universities are advised to review their contractual arrangements, ensuring that they are clear about the various forms of pre- and post-enrolment information provided to students"

At the point at which an offer of a place is made, institutions must ensure that their pre-contract information duties are discharged. It is not enough to repeat information already given. Prospective students must know not only what the terms of the proposed arrangement are, but how key features may change during the contract period and when this might happen. If anything has changed since the applicant considered the pre-enrolment information on which their interest in the institution or course is based, they must be informed and their agreement to the change obtained. The content of the institution's full terms and conditions must be provided in a durable medium and the applicant must be made aware of their 14-day right to cancel, once a place is accepted. This is of course particularly significant during clearing when prospective students can accept a place at one institution only to cancel it less than two weeks later if a better opportunity arises.

As with any consumer contract, the content and presentation of the terms and conditions that form the basis of the relationship between student and institution are critical and must reflect a symmetry of rights and obligations if they are to be enforceable. Reserving an unfettered discretion to change fundamental aspects of the arrangement, or imposing blanket limitations on liability will always fall the wrong side of the line. Failing to highlight key terms or to use plain and intelligible language will also fall short of what is required in order to demonstrate fairness and therefore enforceability. The CMA has separately drawn attention to the iniquity of applying academic sanctions to non-academic debt and there should always be an emphasis on transparency, proportionality and reasonableness.

The practical objective behind all of this is the delivery of a positive student experience, which also extends to appropriate action in the event that things go wrong, and includes the handling of complaints.

Under the new regime, it will be easier for authorities tasked with regulating quality and compliance to investigate and prosecute institutions for alleged offences. Regulators including the CMA, Trading Standards, and the Information Commissioner's Office will have greater freedom. Others such as the Office for the Independent Adjudicator and the Quality Assurance Agency can expect their caseload to increase.

"Failing to highlight key terms or to use plain and intelligible language will also fall short of what is required in order to demonstrate fairness and therefore enforceability."

Section 55 of the Act will make it possible for students to demand the repeat performance of a service if it was not delivered with reasonable skill and care, or if the institution did not comply with information supplied about the service it contracted to deliver. In the event that repeat performance is not possible or not achieved within a reasonable time, there is the right under section 56 to a decrease in price. This means a reduction in price of an appropriate amount, calculated with reference to the discrepancy in value between the service the consumer paid for and the service actually provided. Depending on the nature of the contractual breach, this could result in a full refund, although that would seem unlikely in the context of educational services if the student was able to attend a course.

It should be noted that a price reduction may also be claimed even where the institution did not breach the student's consumer rights if there was a failure to comply with information – such as a commitment to a particular standard or approach – that was a key reason why the student decided to contract with them as opposed to another provider. Liability for breach of these rights cannot be excluded and it is therefore critical that all staff with the authority to make representations about how educational services will be delivered, recognise and avoid the possible consequences of deviating from the terms of the original arrangement.

Between now and October, universities are advised to review their contractual arrangements, ensuring that they are clear about the various forms of pre- and post-enrolment information provided to students and how this has changed over time. They should also ensure that key personnel are trained to understand the risks associated with decisions affecting service delivery and complaints handling. Students are now required to contribute a larger proportion of their own money than ever to the costs of higher education and their expectations have changed, perhaps in line with their financial commitment. Students also have greater awareness of their legal rights and, with so much at stake, are more motivated to enforce them. Combine those factors with an amended statutory regime designed to further empower students as consumers, through external enforcement and additional remedies and the importance of clear, comprehensive and accurate documentation that is implemented fairly becomes compelling.

 Contact us: Kris Robbetts is a senior associate at leading education law firm Veale Wasbrough Vizards. Kris can be contacted on 0117 314 5427 or at krobbettst@vwv.co.uk

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