The problems with the OfS’s approach to enforcement

A recent piece by Iain Mansfield The OfS is not light-touch or proportionate | Times Higher Education (THE), included concerns that universities were not willing to submit to regulation and were instead turning to legal challenge, thereby thwarting the aims of a transparent, fair and accountable regulatory system and wreathing the regulator’s work in “unhelpful mystery”.

In fact, the OfS’s published approach to enforcement demonstrates that it lacks basic safeguards around transparency, fairness and accountability and it is hardly surprising if providers are therefore unable simply to “submit” to it.

How does the OfS say it will enforce compliance?

The Regulatory Framework describes the OfS’s general approach to monitoring the risk of breaches of registration conditions. It states that the OfS will use “lead indicators” based on “regularly obtained reliable data” from providers and others, alongside reportable events from providers and wider strategic intelligence, including whistleblowing and student complaints and it appears press reports.

In relation to quality and standards, where general monitoring suggests there may be compliance concerns, the OfS reserves the right to do one of the following at its complete discretion and in any order:

1. Engage with the provider to ensure it is aware of the issues.
2. Gather further information from the provider or from elsewhere
3. Use its investigatory powers.

The OfS has the power to publish the fact that it has started an investigation and its Regulatory Advice on publication of information (officeforstudents.org.uk) states that it will normally do so, publishing the identity of the provider and a summary of the matters being investigated.

A number of points flow from this:

• It is self-evident that being named as being subject to an investigation for compliance concerns is in itself a damaging thing, however much it is made clear that there is no finding of guilt at that stage. It is damaging not just to the reputation of the provider, but to the reputation of its students, staff and graduates.
• A decision to investigate will be based on the interpretation of data and intelligence of which the provider is completely unaware and which will by definition relate to matters that have already occurred and therefore may no longer represent the current state of affairs.
• The OfS may choose to discuss the issues with the provider or it may not; there is no assurance of transparency.
• If it decides to investigate the OfS may publish details about its concerns, normally having asked for the provider’s views on publication, but without any obligation to abide by those views. It gives no guarantee that it will be fair to the provider in reaching that decision; indeed its starting position is that it normally will publish.

Is it any wonder, then, if some providers look to legal advice to protect their positions?

By way of contrasting example, the Competition and Markets Authority states that its first step on identifying compliance concerns is usually to discuss them with the business in question, except where this would prejudice the investigation or there is extreme urgency (CMA58: Consumer protection – enforcement guidance (publishing.service.gov.uk)).

When do providers have the chance to make representations?

The first point in the investigation process where the OfS undertakes to share information with providers and to allow them to make representations is after it has completed its investigation.

The OfS may carry out the investigation itself, or use academic assessors. The investigation will usually involve a visit and interviews with staff and students. The OfS may therefore be discussing issues relating to its concerns with many people, increasing the risk of rumours, leaks and reputational damage, without ever having told the provider exactly what the concerns are or establishing whether there is any relevant context, developments or background that should inform the OfS’s interpretation of data or intelligence.

After its investigation, the OfS will reach a view about compliance with the regulatory condition and write to the provider to set out the reasons for its provisional decision and the evidence relied on. Only at this point is the provider is able to submit any further information it considers relevant. However, the Regulatory Advice on publication of information makes it clear that the OfS will normally publish its provisional decision, the reasons for the provisional decision, and its detailed assessment of the relevant issues, including the underlying evidence considered in that assessment.

It is important to note that at the point it proposes to publish its provisional decision and its reasons, the OfS has not undertaken to engage at all with the provider to share its detailed concerns, to consider the provider’s responses and to reflect on whether that should affect its decision-making. This is hardly in accordance with the principles of fairness and natural justice.

What does the OfS say about early settlement of concerns?

The position is even worse when one considers the OfS’s Regulatory Advice on monetary penalties (Regulatory advice 19: The OfS’s approach to determining the amount of a monetary penalty – Office for Students). This includes a section on early settlement, designed expressly to save the OfS (and the provider) the resources that would be required to produce and respond to a provisional decision about a breach. Based on the process described above, settlement would therefore be proposed before the OfS has explained to the provider in any meaningful way what the issues are. To avail itself of the settlement discount, the provider must publicly admit to the breach of condition(s) exactly as the OfS describes them in the settlement agreement, without making any comments or representations on them.

Fair enough, some might say: it is up to the provider to decide whether or not to settle on these terms without the opportunity to present its side of the story. There is, however, a fundamental problem. In order to decide what the appropriate penalty is, to which any discount will relate, the OfS states that it will take into account the following:

• the nature, seriousness and impact of the breach, which determine the ‘baseline’ penalty.
• any mitigating circumstances and any aggravating circumstances
• the provider’s track record of compliance and the likelihood that a breach could happen again.
• any other relevant factors.

Quite how it can properly consider these matters without hearing the provider’s representations on them is indeed an “unhelpful mystery”.

Even more fundamentally, to adopt a process for settlement that requires the provider to admit to breaches without having a chance to put forward any relevant contextual considerations cannot be considered good regulatory practice. Ofgem, by way of comparison expressly states in its enforcement guidelines (Enforcement Guidelines 23 March 2022.pdf) that it will share its initial findings and seek the energy provider’s representations on them as part of the settlement procedure. It is not clear why the OfS could not do the same.

Who makes the decisions?

Confidence in the process is not enhanced by the fact that decisions to open investigations, publish information about them, make provisional and final decisions of breach of condition, (and presumably, though not explicitly stated, to offer a settlement) could all be made by the same individual. Under the OfS Scheme of Delegation (Scheme of delegation 22 September 2020 (officeforstudents.org.uk)), this could be either the chief executive or the director of regulation, or some other appropriately senior member of staff duly authorised by one of them. The effect of this the concentration of a large amount of discretion in a single decision-maker, never the most reassuring of models from a legal perspective.

There is also no readily accessible right to review or appeal the OfS’s judgments about breaches of conditions. In the context of the quality and standards conditions, the judgments must take into account but not necessarily follow the academic assessors’ report. The conclusion of that report cannot it seems be reviewed or appealed either. This should be contrasted with the Ofsted process where there are express published mechanisms to complain about the inspection and the report (Complain about an Ofsted inspection report – GOV.UK (www.gov.uk).)

Conclusion

Faced with this degree of lack of transparency and accountability and potential unfairness, it is not surprising that institutions seek to protect their positions. It is also difficult to have much confidence in any resultant regulatory findings. There really is a need for an urgent change of approach.

A shorter version of this article originally appeared in the Times HE 08.03.23