Compliance with the CMA’s Guidance on Consumer Protection – Mid-term Report

We’re almost exactly half way through the six-month period of grace afforded by the Competition and Markets Authority for implementation of its guidance for universities on complying with consumer protection law, and so it seems like a good time for a half-term update on where the sector seems to be encountering the most difficulty. These observations are based on the unscientific, but probably not unrepresentative, sample of the instructions we’ve received and the wider conversation we’ve had with the sector about compliance.

As is to be expected, there has been a wide range of institutional approaches to compliance, but a number of common areas of difficulty appear to be crystallising.

Substantively, the biggest challenges appear to be around specifying course content and fee setting. As regards course content, the main problem seems to be striking an appropriate balance between setting out sufficient details of modules to be provided so that students are able to distinguish between the respective benefits of the same courses at different institution, and reserving enough flexibility to allow courses to evolve and develop between the time a student accepts an offer and ultimately completes his or her studies. The CMA guidance makes it clear that courses need to be delivered as advertised unless:

1. Students expressly and freely agree to the changes;
2. Students who are unhappy with the changes have the right to withdraw from the programme “without penalty”.

The “without penalty” proviso is potentially problematic (and arguably would fail the test of clarity, were the CMA guidance contractually binding). Let’s say a student in their second year of a degree is concerned that key modules advertised as being available have been withdrawn. She is not happy with the alternatives offered and feels that it is no longer the degree that she wanted to undertake. She has found another course, but it is too late to transfer for this academic year. What does withdrawal “without penalty” look like in these circumstances? No fees for the year in question, certainly, but what about wasted expenditure and delayed completion? A possible solution might be to have a general rule (e.g. no fees for the year in which the withdrawal occurred) and a provision that allows students to put forward their case for further loss so the university can offer redress in appropriate cases. Clearly, careful planning and communication of changes will also be important to keep required redress to a minimum.

Although not an issue in the context of regulated fees, the sector seems to be struggling to adjust to the expectation that all other fees should be set out in advance for the whole course for which a student is applying. But it is really important that it does adjust, for the following reasons:

• The core terms of a contract (which includes the price) are exempt from any consideration of their fairness, provided they are set out clearly and comprehensibly. This means that if universities do rise to the challenge, they will be in control of how much they charge.
• If a core term such as the price is not so set out, then any proposed increases will be assessed for fairness and if not considered fair will be unlawful and not binding.

Again, we are seeing a range of approaches to this. Some institutions are committing to limiting annual fee increases to inflation. Others are stating that fees in subsequent years may increase by “up to x% above inflation”. Still others are reserving the right to increase fees by an unlimited amount in future years but only in specified and very limited circumstances that are outside the University’s control.

The main procedural difficulty that has (predictably) materialised is how to comply with the requirement to supply the pre-contract information to applicants at the time the offer is made, particularly for those who are made offers via UCAS, and then to confirm that information in a durable medium when the offer is accepted. There seems to be a disparity across the sector between those who are planning to include the full text of all their regulations in the pre-contract information and those who are planning to summarise the key ones, with links to the full set. The tension here is between allowing applicants to familiarise themselves with the terms of the engagement they are about to enter into without providing so much information that there is no realistic prospect of the “average” applicant reading it. The question of what the most effective “durable medium” might be is also still up in the air for many institutions.

Overall, the half term report is that the sector has very diligently applied itself to effecting necessary change but some big issues remain outstanding and work remains to be done.

Shakespeare Martineau is a Birmingham-based law firm with expertise in legal issues affecting the education sector. They are the AHUA’s national sponsor and work closely to advise members on emerging issues. Smita Jamdar regularly blogs on the Shakespeare Martineau education blog – Going Further and Higher.