OfS will intervene if a university faces closure

A new condition of registration would allow the regulator to compel providers to take certain actions if facing potential closure

The Office for Students (OfS) has introduced a new registration condition to protect students if a higher education provider faces potential closure.

The new condition will give the regulator the power to intervene when a provider faces the risk of market exit due to severe financial difficulties, or other causes.

It will be able to direct universities and colleges to take certain actions. These might include arranging student transfers, providing information, advice and guidance to students, or providing refunds.

The announcement comes as a result of a full consultation, which saw providers express concern about the impact of the new condition C4 on their autonomy.

“A majority of those who responded to the consultation did not support the introduction of condition C4,” says the OfS document explaining the decision, acknowledging that “many raised concerns about the impact of the proposals on institutional autonomy.”

“We have considered these issues carefully,” the document continues, “and, as required by our general duties, we always have regard to the need to protect the institutional autonomy of English higher education providers. However, we do not consider that the points made about institutional autonomy are sufficient not to proceed with these measures for a number of reasons.”

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 – Susan Lapworth, OfS

The OfS says the proposals were supported by the students and their representatives who responded to the consultation.

It says condition C4 has been introduced for three reasons:

  1. The pandemic has had an impact on the financial position of some higher education providers. As such there is a greater risk of a small number of providers needing, or choosing, to close.
  2. The OfS has identified common weaknesses in the student protection plans universities and colleges must implement in the event of a risk of closure.
  3. Swift action sometimes needs to be taken to protect the interests of students in these circumstances and using existing regulatory tools can create unhelpful delays.

“This is a significant change to the OfS’s regulatory framework which will give us the power to intervene swiftly where there is a real risk of a university or college closing,” said Susan Lapworth, director of regulation at the OfS.

“It is important we can intervene in these circumstances because students are particularly vulnerable and they must be properly supported. We would expect, for example, all students to receive tailored guidance, and the option to complete their studies at a suitable alternative provider.

“Universities and colleges can be reassured that the scope of this power is narrowly focused on situations where closure is a credible possibility, and we have made some amendments to our proposals to make this clear.

“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. 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.”

Condition C4 will be imposed on registered HE providers from 1 April 2021.

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