Review Findings Published - Why You Should Review Your Student Contracts
On 22 July 2016 the Competition and Markets Authority (CMA) published its review on consumer law compliance in the higher education undergraduate sector.
It concluded that whilst considerable efforts have been made by many higher education providers to review and amend practices, terms and policies, there is still room for improvement. In particular, some higher education institutions:
- still use terms that give them wide discretion to vary fees or course content or to withdraw courses altogether
- have policies that could hinder or prevent a student from making or progressing a complaint
- apply academic sanctions for non-academic debt, despite high-profile criticism
Enforcement action has now been taken against three higher education providers, requiring formal undertakings to discontinue particular practices, and further enforcement action may follow. An open letter has been issued encouraging proactive reform by all higher education institutions, reiterating the expectation that providers will make any necessary changes to their terms and practices and follow CMA advice. This could be achieved, at least in part, by the implementation of student contracts.
The Benefits
There seems to be a general reluctance in the sector to introduce formal, standardised contracts between students and higher education institutions. However the principle is attracting growing support, particularly since the Consumer Rights Act 2015 made specific reference to the higher education sector when confirming which services are covered by the legislation. Which? has also made a direct call to the sector to introduce standard form higher education contracts to ensure students can easily find and compare terms.
The introduction of student contracts could have benefits for both institutions and students. The CMA has emphasised the advantages to the application process if an institution's terms can be easily located and accessed by students before they accept an offer. The OIA has also suggested that the scope and frequency of disputes could be reduced if contractual information is consolidated as far as possible to promote clarity and manage expectations.
On a more practical note, having a single, discrete contract means institutions only need to review and update one document rather than a multitude of disparate elements, which is more efficient and helps to prevent the development of inconsistencies. Consolidating the terms of an agreement into a single document, or at least fewer documents, also enhances transparency in an area subject to external scrutiny, which should inspire student confidence.
Rights enshrined in contracts do not necessarily have to be enforced. There is always a choice. Contracts can identify and reserve rights without there being an automatic compulsion to exercise them. Many valid contractual claims are never actually pursued, either because the issue is not sufficiently important to the parties to justify the time and costs associated with doing so, or because a commercial settlement is reached – settlements that are less likely to have been agreed without a contract being in place.
What next?
Discrete student contracts and model templates have been considered before and a small number of institutions already have them in place. It remains to be seen whether sector-wide traction is now more realistic. The changing prevailing conditions may create potential benefits but they do not remove all of the complexities. Not all student contracts will be consumer ones, so obligations and remedies will vary. However, both parties should benefit from clarity of obligations, regardless of the status of the relationship.
Perhaps the time is now right to reconsider the position, particularly given the impending creation of the Office for Students (OfS). As a consumer-focused market regulator for England, the OfS will continue the work undertaken by the QAA in prioritising the integration of consumer law compliance into the baseline requirements for quality compliance, a process that already involves consideration of the content of student charters when appraising the student learning opportunity.
The higher education sector is at another significant crossroads and there may now be justification for the important mutual sentiments already contained in widespread student charters to be given discrete contractual form and effect.