The number’s up for unqualified college CFOs

Only qualified accountants can work as chief financial officers at large colleges from next year, the government has announced.

The 2026 college financial handbook, effective from August 1, requests that college’s CFO job adverts state applicants must be qualified members of a relevant accountancy body.

The rule will become statutory for colleges with more than 3,000 students in 12 months.

The Department for Education said any college wishing to recruit a CFO without an accountancy qualification would need official approval.

Association of Colleges deputy chief executive Julian Gravatt revealed the membership body consulted with the DfE on the change.

He said: “The vast majority of people in this role have relevant qualifications, but there are times when it’s necessary to use people with experience in related disciplines or to combine roles to save management costs.

“These are exceptional cases and we welcome the fact the DfE is taking a comply-or-explain approach in that there’s a standard to follow but an opportunity to set out reasons for doing something different. There will be 12 months to prepare for this rule change.”

A Department for Education spokesperson said: “It is only right that those entrusted to manage their finances are equipped with the skills, expertise and experience relevant to their college, including, where appropriate, a professional accountancy qualification.”

Electric car sacrifice schemes

The handbook, updated this week by the DfE, also confirmed electric vehicle salary-sacrifice schemes no longer need prior DfE approval, provided colleges have “comprehensive” mitigations to avoid losses if staff do not uphold their contractual obligations.

DfE approval will still, however, apply to colleges under intervention.

Gravatt said: “Across the country, college staff drive millions of miles a year for work and it will benefit everyone if a bigger proportion of that travel is electric powered.”

Severance threshold

Another handbook update brings rules around staff severance payments in line with HM Treasury guidance, which stipulates special exit payments are only made in “exceptional” circumstances.

Severance payments must be approved by the DfE where exit packages exceed £100,000, or are made to senior leaders earning over £174,000.

If legal advice determines a college has more than a 50 per cent chance of winning a claim at an employment tribunal or arbitration, they must seek approval before offering a “contentious” settlement award.

“Colleges would need to demonstrate why they are recommending a payment to the employee rather than defending the case. If the chance of losing the case is 50 per cent or more, a settlement may be justified,” the handbook says.

Previously, colleges were told only that a settlement should not be offered where legal advice suggested they had “a good chance” of successfully defending a claim. The DfE told colleges that payouts were justified when there was “significant prospect” of losing, especially if the defence costs were likely to be high.

Colleges suffered severance approval delays of several months during 2024 when government backing was needed for payments of £50,000 or more. The DfE admitted at the time that its assessment process needed to improve.

Held to ransom

Elsewhere, the handbook toughens rules on colleges paying ransom or extortion demands.

An existing blanket ban on paying any cyber ransom demand is widened to cover “any ransom or extortion demands”, explicitly including ransomware.

Colleges must also renew their cyber essentials certification annually, as per the college accountability agreement.

Gravatt said the AoC was not aware of any college paying a ransom.

Other changes include a new expectation on governors and finance and audit committee members to receive financial training, and a requirement to consult the DfE before introducing a pension scheme outside the Teachers’ Pension Scheme or Local Government Pension Scheme.