Office For Students And National Trading Standards Act On Higher Education Terms

What is the OfS/NTS partnership?

Through its partnership with the National Trading Standards (“NTS”) established in 2022, the Office for Students (“OfS”) is able to refer cases where it identifies a potential breach of consumer protection legislation to the NTS and receive assessment and advice about the potential non-compliance of its registered providers.

The OfS has recently published details of the terms and conditions of three providers that it referred to the NTS due to potential unfairness and non-compliance with consumer protection legislation.

Terms of particular concern to the OfS are those which limit a provider’s liability to its students and undermine their contractual obligations and the remedies available to students. For example, restrictions on the amount of compensation or refunds students are eligible to receive in the event a provider fails to comply with its obligations are likely to be challenged.

Terms which lack clarity, are open to multiple interpretations, and which allow providers a wide discretion to vary their services without sufficient explanation were also highlighted by the OfS as problematic.

We examine the concerns of the OfS in more detail below and the action taken by the three providers to rectify their student contracts following assessment by the NTS.

Can institutions limit liability?

Any term which seeks to restrict a provider’s liability to provide compensation or other remedies to its students in circumstances where it fails to meet its contractual obligations is likely to be unfair and open to challenge. It is an important aspect of the consumer laws on unfair terms that a party should be entitled to full compensation where the other fails to honour its obligations. A term which limited an institution’s liability for loss or damage caused to “100 per cent of all tuition fees payable by the student” was considered unfair and most likely blacklisted (automatically unenforceable) under the Consumer Rights Act 2015. This limitation of liability clause was removed.

Limitation of liability clauses should have restricted applicability to the impact of events outside a provider’s reasonable control, and it is important that any events listed as such are truly unavoidable. In its case reports, the OfS reiterated the opinion of the Competition and Markets Authority in its guidance to the higher education sector that industrial action by a provider’s own staff is not a true force majeure event and therefore should not be listed as an event beyond a provider’s reasonable control. Providers should also make students aware of the steps they will take to minimise disruption in such circumstances, allowing students the opportunity to foresee when and how they will be affected by unavoidable events before they enter into a contract.

What about varying their educational services?

Terms which allow providers to vary their services during the contractual term should be narrow, allowing only minor adjustments that are either required by necessity or are unlikely to negatively impact students. Students should be given a genuine right to cancel their contract and switch to an alternative provider where they are adversely affected by any change in their course or its fees. A term in a student contract which reserved the institution’s right to “change any aspect of a course including availability of the course, course dates, tutors’ timetables, curriculum and the material at any time. It is students’ responsibility to be aware of the changes” was in the opinion of the OfS unreasonably wide and was subsequently amended to outline how the institution would deal with unavoidable events and the options for students to withdraw or switch course where they were adversely affected.

Terms which allow providers to increase tuition fees need to have a clear explanation as to how and why any increases will be made. Reference should be made to any mechanisms or caps (such as linking increases to the Retail Price Index). Students should have a genuine right to cancel if the final price is too high. “We will review tuition fees annually and may increase tuition fees for subsequent academic years in the circumstances and on the basis of identified in your offer letter” in an institution’s student contract was amended to clearly state that fees will remain the same as those in the first year of study unless otherwise stated in the offer letter. It must be clear from the outset as to why and how costs will increase throughout a student’s course, and this must ultimately be reasonable. Students should not be required to pay any additional costs of a provider varying its course content and structure.

Are terms clear, intelligible and transparent?

The OfS highlighted concerns in one student contract due to its presentation and understandability; the entire contract was capitalised, comprised of one page of terms and included terminology that was not clearly explained.

Terms which are open to wide interpretation should be reviewed and narrowed, such as a term reserving the right to vary elements of the course “where there is no material detriment” to students was required to be made clearer.

Any fees charged to students must be proportionate and fair, for example, high administration charges or short windows for eligibility to receive refunds are likely to create an imbalance in the obligations of the parties and be detrimental to students.

There should be no statements which attempt to create a hierarchy of terms, for example, a term stating that a student contract “constitutes the entire agreement between you and [the provider] and supersedes all previous agreements between you and [the provider], whether written or oral” was highlighted by the OfS as contravening CMA guidance that all information given to students before they enter into a contract, such as at open days and in course information, is likely to be a term of a contract and legally binding.

What action should institutions take?

Following the publication of the OfS’s case reports, institutions should review their terms and conditions and make comparison with the specific wording and sentiment of the terms subject to concern. Amendments should be made to ensure that students understand the terms on which the provider will deliver their course before they enter into the contract, and any variation a provider thinks it might make must be clearly set out, sufficiently narrow and not subject the student to any detriment.

Ultimately, the student contract must be easy to understand by an institution’s students and must be fair and transparent in the context of students being consumers and equipped with numerous protections and rights.