The Competition and Markets Authority (the CMA) has published its findings following a review of consumer law compliance in the higher education undergraduate sector. Whilst significant progress has been made in the sector, the CMA warns that some providers still have plenty of work to do and has taken enforcement action against three universities to ensure compliance.
The CMA's review follows the publication of its consumer law advice, in March 2015, which was intended to help higher education providers to understand their responsibilities under consumer laws.
The advice addressed, for example, the information required to be made available to students before they make their application (including information regarding tuition fees, course content and structure, and additional course costs) and avoiding unfair terms in student contracts particularly relating to the discretion of the provider to vary courses and fees.
The CMA's compliance review revealed mixed results. Certain practices appear to have been improved. However, there are concerns with the length of time it is taking some providers to ensure compliance with the CMA noting examples of potential non-compliance including:
- the accessibility of information and terms;
- terms or wording that allow providers a wide discretion to vary tuition fees;
- a lack of transparency about additional course costs (e.g. costs for field trips and studio hire);
- terms or wording that allow providers a wide discretion to vary or cancel courses;
- wording that potentially unfairly limits liability (e.g. disclaimers regarding the accuracy of information on websites);
- terms or wording that prevent students from progressing or graduating if they owe non-academic debts (e.g. accommodation fees); and
- terms or provisions in complaints processes that could deter students from instigating or progressing complaints.
The CMA has exercised its statutory powers to secure undertakings from three universities. Whilst the undertakings differ between each university, in summary, they seek to:
- stop contractual terms that prevent students from progressing or graduating if they owe non-academic debts and allow a wide discretion to vary tuition fees;
- improve the information provided to prospective students regarding additional course costs and the circumstances in which fees may vary; and
- ensure that students are not deterred from raising or continuing to pursue complaints.
Following the recent press coverage regarding proposals to increase tuition fees, the undertaking provided by Buckingham regarding increasing fees is of particular interest. Buckingham agreed not to enforce or rely upon the term "Fees are reviewed annually and may increase, usually in line with inflation" for students with contracts concluded after 4 July 2016.
Providers are not prohibited from having terms which permit fees to be increased. However, the CMA's view is that such terms are likely to be considered to be unfair if they do not meet certain criteria including, for example, if they do not clearly explain the circumstances in which fees may be increased and are not linked to an objective verifiable index such as Retail Prices index. The CMA's report contains a useful list of compliance tips in this regard.
Buckingham also agreed not to charge any additional course costs where these costs had not been specifically included within student offer letters and made available in a clear and comprehensible manner before students made their application.
The review reflects our experience of advising providers in this sector. The battle can often be ensuring that every faculty and/or department is aware of the provider's obligations towards applicants and students, and ensuring that any proposed changes to courses and/or fees are planned and communicated sufficiently far in advance to minimise any disruption to students and to avoid misleading prospective students. Careful planning and clear communication is, in our experience, one of the key factors of ensuring compliance. Indeed, the CMA's open letter to higher education providers following the review specifically asks providers to ensure that staff are aware of the provider's obligations and internal procedures.
The review reiterates a number of points raised in the CMA's advice in March 2015 and provides some welcome additional guidance in respect of specific concerns highlighted during the review such as increasing fees in line with inflation and how information should be presented to prospective students.
Following the review, higher education providers would be well advised to continue to review existing policies and practices to ensure that they are fit for purpose and otherwise compliant with consumer laws. The CMA is clearly being proactive in monitoring compliance in this sector and unhappy students will adversely affect reputation and, ultimately, the bottom line.