OfS seeks power to direct universities at risk of collapse

The Office for Students says it needs the authority to rapidly intervene if a university is at risk of closing

The Office for Students is seeking new powers to manage universities on the brink of collapse, amid growing concern for faltering higher education finances in the wake of the Covid-19 pandemic.

Although the new rules would strengthen the watchdog’s hand in the event of a closure, it is designed to only affect the operations of endangered universities. 

Higher education providers (HEPs) with a clean bill of health would not be expected to comply with the new rules, which would allow the OfS to make “rapid intervention” if it considered a university at risk of “market exit”.

The higher education regulator will consult on its proposals until 11 September. If agreed, the powers would be finalised in time for the start of the new academic year.

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
– Nicola Dandridge, OfS

Universities identified as ‘at risk’ by the OfS will be required to follow the regulator’s new “Student Protection Direction”, under which the OfS would have the power to direct decision-making at a faltering university.

The regulator will hold universities responsible for ensuring students can complete their studies, transfer to another provider, collect awards and certifications, receive refunds and compensation, and register complaints.

Currently, all OfS-registered providers are required to keep student protections plans that set out how they would protect learners in the event of closure. However, the OfS has concluded that these existing plans are insufficient in the event of a sudden closure; an event made more likely with the challenges of the Covid-19 pandemic. 

Nicola Dandridge, chief executive of the Office for Students, said: “Our regulatory approach has extended the protection available to students if their course, campus or provider closes. We had intended to consult on measures to strengthen our ability to protect students, including from the consequences of provider closure. But with financial risk heightened during the pandemic, it has become clear that we need to prioritise some elements of those plans.

“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.

“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.”

Yesterday, the Department for Education (DfE) set out how it would manage the financial collapse of a HEP. The DfE said it will issue restructuring loans to imperilled universities as a “last resort”. 

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