On 13 June 2014, new consumer protection legislation came into force which will have a material effect on many schools, further education colleges and other providers who enter into contracts with consumers for the provision of educational courses, where the consumer pays for the course.

Although many of the core obligations in the Consumer Contracts Regulations previously applied through the Distance Selling Regulations 2000 and the so-called “Off-Premises Regulations” 2008, the Regulations significantly strengthen existing obligations and introduce new requirements.

More information required for distance and off-premises contracts

Many education providers will enter into “distance contracts” or “off-premises contracts” with consumers. Distance contracts are for institutions that never meet prospective students prior to the conclusion of the contract – for example, where payments for courses are taken online or by telephone. Institutions that conclude contracts for courses at or following a meeting with the consumer away from the institution’s premises - such as at an education fair - will be entering into an off-premises contract.

For both distance and off-premises contracts, the institution is obliged to provide certain pre-contract information in a clear and comprehensible manner. The scope of information has increased under the Regulations. With off-premises contracts, the pre-contractual information and a copy of the signed contract or confirmation of the contract must be given on paper unless the consumer agrees to receive the information on another “durable medium” such as e-mail. For distance contracts, confirmation of the contract must also be provided on a durable medium but not necessarily on paper.

For the first time, there is a requirement to provide certain pre-contractual information for contracts that do not qualify as distance contracts or off-premises contracts (e.g. where the consumer signs up for a course during a visit to the institution’s premises) but there is more flexibility in the way in which this information is provided.

While various contract types are excluded from the Regulations, the only relevant exclusion in this context would be contracts for the rental of residential accommodation. Contracts for the courses themselves do not benefit from any of the exemptions.

Consumer rights to cancel

One of the most significant issues is the right of consumers to cancel distance and off-premise contracts during a cooling-off period. The Regulations extend this period from seven days to 14 days, although it can now be over 12 months if the pre-contract cancellation information is not provided. If the right to cancel applies, specific information regarding the right to cancel needs to be given at the pre-contract stage. A model cancellation form, set out in a schedule to the Regulations, must now be provided, although the consumer is not obliged to use this form in exercising the right to cancel. In the event that a contract is cancelled, all payments made by the consumer must be reimbursed within a period of 14 days, shorter than the previous 30 day period.

In some cases, institutions will start providing services to consumers within the 14 day cancellation period, particularly if courses are provided digitally. They can address this risk by ensuring that they provide the pre-contract information on cancellation and that the consumer expressly requests that the services be provided within the cancellation period and acknowledges that, once the services are fully performed, their right to cancel will be lost. If this is done, the consumer cannot cancel after the services have been performed and if the consumer cancels before the services have been fully performed, the service provider can charge a proportionate fee based on the services supplied prior to the cancellation and the total fees agreed.

Online content

Where educational content is provided online and downloaded by the consumer, the right to cancel will be lost if the consumer expressly requests provision of the content within the 14 day period and acknowledges that they will lose the right to cancel when the content is provided. Therefore, if the right of cancellation applies and you want to avoid or reduce loss of revenue from consumers cancelling contracts after educational content has already been provided to them, it is important to ensure that you can show an audit trail of information provided and express requests and acknowledgements given by the consumer.

Acknowledgement of obligation to pay

In addition to the above obligations, for online contracts, the Regulations require that certain information be provided at the start of the ordering process and immediately before the order is placed. There must also be an explicit acknowledgement that, in placing the order, there will be an obligation to pay, including labelling the order button “Order with obligation to pay” or similar language. If this simple change is not made, the consumer is not bound by the contract even if they confirm the order. There is also a ban on pre-ticked boxes for additional services that require payment to ensure that consumers are only charged for additional services if they expressly consent to the charges.

Although the requirements of the Regulations can generally be addressed through changes to terms and conditions, website pages and business practices, educational institutions should ensure they are compliant with the Regulations to avoid unnecessary loss of revenue, regulatory action or, in certain cases, criminal prosecution.