OfS Consultation on the Oversight of Subcontractual Arrangements in English Higher Education

Oversight of subcontracting in higher education under proposed OfS condition

The Office for Students (OfS) has launched a consultation on a new general ongoing condition of registration (“Condition E8”) targeting lead providers operating through subcontractual arrangements – often called franchising.

What is the background?

Condition E8 would require providers to ensure that the risks to students and taxpayers arising from subcontractual arrangements are identified and managed effectively. The condition would apply to subcontracting in England only, and specifically would not apply to subcontracting to various named entities (such as further education colleges and blue light employers).

The consultation comes following concerns of inadequate oversight, insufficient control of recruitment, admissions, student attendance and assessment in subcontractual arrangements, and inappropriate student loan claims. The OfS states that implementation of the condition would lead to fewer incidences of poor practice in subcontractual arrangements, and better protection for students and taxpayers.

The consultation is open until 1 October 2025, with the condition expected to come into force in January 2026.

The consultation builds on OfS Insight Brief 22, and is separate from the Department for Education’s consultation on the mandatory registration of delivery partners in franchising arrangements.

What are the proposals?

1. New general ongoing condition of registration

The proposed Condition E8 would oblige lead providers engaging in subcontractual delivery with 100 or more students in any given academic year to identify and address risks which are posed by its existing and future subcontractual arrangements. Providers will have to continually review whether they meet the criteria following new or planned intakes of students which exceed the 100-student threshold. The OfS would also have the power to bring providers who do not fulfil the criteria within scope where it has reasonable grounds to suspect that their existing or future subcontractual arrangements pose a material risk.

2. Governance and control environment for subcontracting provision

Providers will be required to have strong oversight and sufficient control so that they can effectively manage the risks associated with subcontractual arrangements. This would involve maintaining a “comprehensive source of information” covering the relevant partners, contracts, policies, procedures and provisions. Providers will not have to routinely submit the collated information to the OfS. Rather, they will need to be prepared to make the information available upon request. It is proposed that providers should establish their oversight and control mechanisms and develop their comprehensive source of information, no later than four weeks after the condition comes into effect.

3. Operating in accordance with the comprehensive source of information

It is not sufficient to have policies and procedures in place to manage the risks associated with subcontractual arrangements; providers must be able to demonstrate compliance with the measures set out in their comprehensive source of information. The OfS proposes that this would include:

• onsite testing of a delivery partner’s practices, including unannounced inspections and student interviews;
• making any necessary changes to contract terms in both existing and new contracts; and
• ensuring that partners have the financial and staffing resources to be able to deliver policies, procedures and other provisions effectively and appropriately.

4. Power of Direction

The OfS would have the power to impose a subcontractual arrangement direction where it has reasonable grounds to suspect that a provider’s existing or future subcontractual arrangements pose significant risks to the interests of students or taxpayers. This could be a direction to take specified actions, or refrain from taking specified actions, within a certain timeframe. In circumstances where risks to public funding are suspected, the OfS could require a provider to stop carrying out a particular activity or withhold payments to a delivery partner. In less severe cases, such as where a shortcoming is identified in control measures, a provider could be required to amend its comprehensive source of information. The OfS would be able to impose a direction irrespective of whether a formal investigation has been started or completed.

5. Providers to provide specified information relating to subcontractual provision

If the proposed condition is implemented, the OfS proposes to amend regulatory advice 9 and 16 to require providers to disclose specified information about their subcontractual arrangements, including the strategic and academic rationale, financial information and certain events pertaining to their subcontractual activity.

6. Monitoring compliance and enforcement action

The current risk-based general monitoring activity of the OfS will be used to identify the potential risks posed to students and taxpayers. Where monitoring activity leads to compliance concerns, the OfS proposes to engage with providers to ensure awareness of the issue, gather further relevant information, investigate the concerns, and issue a subcontractual arrangement direction. If it is decided that there has been a breach of the condition, the OfS will take the full range of its enforcement powers into consideration, with penalties ranging from suspending aspects of a provider’s registration and financial sanctions to the imposition of additional reporting requirements or conditions of registration.

What happens next?

We will publish our response to the consultation in due course. If anyone would like to raise issues for us to consider in our response to the consultation, then please contact Mark Taylor.