Governance News Alert: Proposals for reforms to Office for Students (OfS) registration requirements

Proposals for reforms to Office for Students (OfS) registration requirements

Consultation on proposals for two new initial conditions of registration (treating students fairly and effective governance) and changes to registration application requirements.

The below governance news alert applies to policy changes that will impact providers registered or who are seeking to be registered in England. Providers registered in other nations will not be directly impacted by the consultation, but may wish to read this alert to inform how assurances are sought in their own institutions.

The OfS is consulting on changes to the regulatory requirements for providers seeking to register with it. Part 1 consists of proposals for new initial condition C5 concerned with treating students fairly. Part 2 is on proposals for new condition E7, which covers effective governance. Part 3 involves proposals for changes to registration application requirements. OfS has also published a quick guide to the reforms.

At-a-glance:

• The new initial conditions only relate to institutions in England and will not apply retrospectively to providers that are currently registered, but would apply to any new applications from August 2025
   
• A new Condition C5 would replace the current C1 (consumer protection law) and C3 (student protection plan) and would test whether a provider treats students fairly. Condition E7, on effective governance, would replace the existing initial conditions E1 (public interest governance principles) and E2 (adequate and effective management and governance arrangements)
   
• New requirements for a registration application will also involve submission of financial scenario modelling
   
• Under the new C5 Condition the OfS would look at a provider’s policies and student-facing documents, such as: terms and conditions, student contracts, policies relating to changes to courses, complaints processes, refund and compensation policies and website information
   
• Examples of actions considered to be unfair include: unfair or incomprehensible terms and conditions in student contracts, failing to provide information about additional course costs, inaccurate or false information, creating barriers to making a complaint, publishing fake reviews or failing to publish negative reviews
   
• The new E7 Condition includes five separate but connected tests for effective governance: OfS assessment of documents relating to the workings of the governing body and associated processes; a clear and comprehensive business plan; assessing that key individuals have sufficient knowledge and expertise; assessing that individuals are “fit and proper”; and that the provider has comprehensive arrangements in place to prevent, detect and stop fraud and misuse of public funds
   
• Ensuring that individuals who are responsible for governance have sufficient knowledge and expertise would normally be via an interview
   
• New requirements for a registration application will involve submission of financial scenario modelling in the form of an additional financial table, and associated commentary and mitigations; a diagram showing the provider’s corporate structure; and details of any investigations it has been subject to during the 60 months preceding its application 
   
• The provider will have a duty to proactively report any matter that may affect registration, such as a change in governance or partnerships or a withdrawal of financial support
   
• Where a registration is refused, a provider will not be allowed to reapply for registration within 18 months

Implications for governance:

While the new conditions of registration will not be applied retrospectively, they will be of immediate interest to any institutions going through the process of registration or applying for degree awarding powers. Registered institutions may also wish to consider whether their current processes, policies and procedures align with what the OfS is proposing, as this may affect future regulatory changes.

On treating student fairly, the OfS has drafted a full “prohibited behaviours list’” (Annex D of the consultation) which outlines what it considers to be unfair treatment, covering areas such as student contracts, inaccurate or false claims, omissions, advertising, promotions and complaint procedures. 

The new conditions on effective governance are more rigorous than those currently in place. At the moment, the regulator relies on a provider’s self-assessment of its own capabilities. However, new applicants will have to provide specified governance documents for the OfS to assess, including governing body and risk and audit paperwork, conflict of interest policy and decision making documents. 

Governing bodies of providers already registered, and the teams that support them, may want to consider whether the documentation produced at their own institution is effective in demonstrate good governance, and where it might be improved – bearing in mind that such documentation might eventually become a requirement for all providers.

Institutions submitting a registration application will also have to supply a business plan, setting out objectives over the medium term, its strategy for achieving its objectives and how it will comply with ongoing conditions of registration.

Key individuals will be assessed for their knowledge and expertise via an interview with OfS personnel. It is not clear at the moment if this would include members of the governing body, for instance the chair. 

The requirement that individuals are “fit and proper” implies a greater focus on due diligence when making appointments. The regulator’s interest in a provider demonstrating they have “comprehensive arrangements in place to prevent, detect and stop fraud and misuse of public funds” presumably arises from the recent cases of franchise fraud uncovered by the National Audit Office (see Advance HE Governor View).

Registration applications must also now provide more financial information, specifically financial scenario modelling, with an associated commentary and mitigations. According to the OfS, given the financial risks facing the sector as a whole, “any provider applying to register needs to demonstrate resilience”.

It reveals in the consultation that in the past few years, many providers new to higher education, or in the early stages of operation, significantly underrecruited in the years immediately following registration compared with their forecasts, with more than half underrecruiting by 80 per cent or more. 

Its proposed scenarios of a zero growth projection and one where recruitment is 40 to 80 per cent per cent below target, will test if a provider’s financial model holds up under realistic adverse conditions and it can remain financially viable. 

The OfS has already expressed concerns about optimism bias across the sector in terms of student number predictions and the new details of financial scenario modelling for new registrants is likely to be of interest to finance committees and other bodies and individuals involved in ensuring financial sustainability.

While not applicable to institutions who are currently registered, the new requirements for registration clearly indicate where the regulator’s concerns and focus lie more generally. The consultations provide those involved in governance with a clear steer and an opportunity to revisit areas such as student contracts, business plans and financial forecasting, to make sure they are as robust as possible.