On 1 October 2015, the Consumer Rights Act 2015 (CRA) came into force. It is a major overhaul and consolidation of consumer protection law with significant changes affecting businesses and organisations selling online content, goods and services. While the spotlight has primarily been on the impact on retailers, educational service providers including schools, as service providers with parents as consumers, need to be aware of the changes in order to remain compliant with unfair terms legislation contained in the CRA.
Given that independent schools are more vulnerable to challenge and exposed to risk they should ensure that they review their contractual arrangements and terms and conditions. The implementation of the CRA makes it more straightforward for regulators when investigating and prosecuting schools for alleged offences relating to both quality and compliance. It also clarifies the remedies available to parents where their children's education falls below the expected standard. The most significant aspects of the CRA are considered below.
As before, a term in a contract (such as a parent contract) is unenforceable if it is unfair. Aside from any potential criminal sanctions, this means that parents may not have to comply with a clause within a contract or potentially the entire contract. The Competition & Markets Authority (CMA) has produced updated guidance relating to the 'grey list' which provides examples of terms that could be unfair; and the 'blacklist' which provides examples of terms that will always be considered unfair.
In addition, the CMA has given further guidance stating that a term may be deemed unfair if “it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”.
The CRA makes it clear that contracts must be transparent. That means the terms must be legible and written in plain, intelligible language. The content and presentation of the contract should clearly set out the rights and obligation of the parties, and must highlight significant or onerous/unusual terms.
The CRA further strengthens protection for consumers (parents) through the implementation of additional remedies. Such remedies include parents having a 'right to repeat performance'. If a service is not delivered with reasonable skill and care, or if the school has failed to comply with the service it contracted to provide, the school could be required to deliver the service again. In the event that a right to repeat performance cannot be fulfilled, either through it not being possible or where it cannot be done in a reasonable timeframe, a parent would be entitled to a reduction or refund of the fees paid. Any price reduction will be calculated by reference to the difference in value between the actual fees paid and what the service actually provided was worth.
It should be remembered that the new remedies do not prevent consumers also seeking alternative remedies such as specific performance and damages for breach of contract.
Risk areas for independent schools
Independent schools are now exposed to greater risk of consumer complaints and regulatory action. Schools should review all marketing materials, as well as contractual documentation, in light of the risks highlighted below:
- Any contractual arrangements and documentation which relate to the school and services provided (that attract prospective parents) may be:
- misleading and unfair;
- absent of all of the significant information; and
- lacking transparency.
- Issues may arise where staff and third parties provide information or attempt to sell the school and its services/facilities to prospective parents. Any statements made in advertising materials or verbally to prospective parents by the school about the school or its services which affect a parent's decision about their child attending the school will be treated as part of the contract
- Any material information could also be inaccurate, outdated or inconsistent
- Schools may fail to notify prospective parents about significant changes to the school and services provided
Action Points for Independent Schools
Schools should ensure they comply with the provisions in the CRA. This will allow consumers to make a fully informed decision before entering into any contractual arrangements (such as a parent contract). In light of this, schools should consider the following action points:
Review contractual arrangements and other terms and conditions
Material information must be assessed and amended so that it:
- is accurate and up to date;
- is consistent with all documents relating to the school and services;
- includes fair terms that do not fall within the above grey or black list;
- is clear, comprehensive and transparent; and
- is easy for the consumer to locate.
Review all advertising and marketing materials
Including brochures, prospectuses and websites to ensure that all information being provided to prospective students and their parents is:
- correct and accurate;
- not misleading or exaggerating the benefits of studying at the school; and
- not outdated.
Train key personnel
Where information is relayed verbally by staff (such as at open days, parents’ evening, meetings, interviews) schools must ensure training is provided to staff; so that they understand:
- the key messages and information to avoid misleading consumers;
- the risks associated with relaying incorrect information; and
- the complaints procedure.
Although the CRA does not fundamentally change previous provisions, it does make the consumer rights provisions more pertinent and the process of investigation and prosecution easier to regulate. The costs relating to complaints, legal action from parents and/or even regulatory action, are likely to be significantly greater than costs involved in taking the actions suggested above. Accordingly, schools should ensure that they invest time and resource in reviewing documentation and training key personnel.