A revised approach to this issue is to be welcomed because, as the consultation itself recognises, there are significant problems with the current approach. The OfS identifies the following as key issues, but we are aware of more general and widespread dissatisfaction with the bureaucratic burden of the process to date:
• Providers failing to report serious matters or reporting them in an opaque way that downplays their significance
• Providers over-reporting trivial matters
• Providers not understanding how to assess materiality
What has the OfS proposed regarding reportable events?
The OfS is proposing a new definition for a reportable event, and new guidance to assist providers in deciding whether to make a report.
The proposed new definition is as follows:
“A reportable event is any event or matter that, in the reasonable judgement of the OfS, negatively affects or could negatively affect:
1. The provider’s eligibility for registration with the OfS.
2. The provider's ability to comply with its conditions of registration.
3. The provider's eligibility for degree-awarding powers or university title, or its ability to comply with the criteria for degree awarding powers.
In interpreting ‘the reasonable judgement of the OfS', the OfS will, as a matter of policy, consider whether a reasonable provider intent on complying with all of its conditions of registration and acting in the interests of students and taxpayers (rather than in its own commercial, reputational or other interests), would consider the event or matter to be material.”
Interpreting the new OfS definition of a reportable event
In our view, this definition represents a significant improvement on the current one in terms of clarifying both what needs to be reported and how to judge materiality. It links the requirement to report more closely to the three key strands of OfS regulatory activity: registration; ongoing compliance with conditions; and its gatekeeping role in terms of degree-awarding powers and university title. The reference to the interests of students and taxpayers above the provider’s own commercial, reputational or other interests is also more in keeping with the principles-based regulation that the OfS professes to espouse.
What does the OfS view as a reportable event?
The accompanying guidance sets out a non-exhaustive list of matters that must be reported in all circumstances, and others that may need to be reported only if they meet the test set out above, taking into account the particular circumstances of the case. For example, a low-value fraud involving a junior employee may not be material, but the same fraud involving the accountable officer would be. The consultation recognises that there may be circumstances where the OfS and a provider take a different view on whether or not a particular matter is reportable. The OfS states that it will not take regulatory action for failing to report where it is satisfied that the provider has properly considered the issue, and recommends that providers should keep a record of their deliberations.
There are additional details in the revised guidance about the OfS’s expectations on the timing of reports, distinguishing between events that have yet to happen and those that have already occurred.
How will the OfS respond to a report?
The guidance also sets out more clearly what the OfS will do when it receives a report. It will decide one of the following:
1. The information contained in the report should be recorded but no further action is required.
2. A more extensive assessment is required because “the information contained in the report is likely to affect the provider’s eligibility for registration, its compliance with its conditions of registration, or its eligibility for degree awarding powers and university title, or its ability to comply with the criteria for degree-awarding powers”.
3. A more extensive assessment is required because the information adds new information to a known issue or to a pattern of events or issues.
If an extensive assessment is carried out, it could result in a change in the OfS’s risk assessment of the provider and that in turn could lead to enforcement action or specific conditions of registration.
What are the implications for providers?
Universities, colleges and independent providers will need to review whether they have the optimal internal processes to identify reportable events in a timely way. These will include:
- An awareness and understanding at governing body level of the obligation to report, and then delegation of the duty to report to the accountable officer;
- A process by which reports of potentially reportable events can be considered at an appropriately senior level to determine whether assessed against the criteria discussed above, they should in fact be reported;
- A system to record the reasons for deciding not to report in cases where a fine judgment is made; and
- A feedback loop so that the governing body receives reports about reports made and events not reported periodically monitors the appropriateness of these decisions, and requires changes to the process where necessary.
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