An awarding body that accused Ofqual of unfairly driving it out of the apprenticeship assessment market has vowed to not pay a £50,000 fine imposed by the regulator.
Qualifications for Industry (QFI) surrendered its recognition with Ofqual last year and all 17 of the company’s full-time staff lost their jobs as the firm went dormant in March.
QFI’s owner Richard McClelland previously told FE Week the decision to close followed a “traumatic” six-month investigation into the company’s capacity and capability that left him feeling suicidal and drove his responsible officer to stress medication.
Ofqual today published a monetary penalty notice following a review of the case by the regulator’s enforcement panel.
The regulator claimed QFI breached a special condition placed on the company in 2021 which said that no more than 200 learners in total were at any one time allowed to be registered to take its qualifications and no more than 200 learners in total could take assessments for its qualifications in any 12-month period.
QFI did not dispute that these volumes had been exceeded but alleged that the regulator misled the organisation into believing that this special condition had been lifted.
The company also argued that the 200 cap only applied to the qualifications and apprenticeships it first gained recognition for, not the many other courses it was recognised for through later expansion requests.
Ofqual’s enforcement panel, which is made up of its own employees and board members, ruled that QFI either “wilfully breached the special condition or was grossly negligent in assuming that the special condition no longer applied”, adding that there was a “significant failure of governance at QFI”.
The regulator’s enforcement panel considered whether to reduce the £50,000 fine amount in light of QFI’s decision to surrender, but it ultimately decided this would not be “appropriate” as Ofqual’s “fining power” would be “less of a deterrent if awarding organisations believed they could operate in a non-compliant manner and surrender recognition to avoid a monetary penalty”.
McClelland said Ofqual was using QFI as a “sacrificial lamb” and said he does not “intend” to pay the fine.
He told FE Week: “We continue to refute all allegations made by Ofqual. The decision to fine QFI is just that of a kangaroo court made up of internal people making decisions to support internal processes. We do not intend to pay the fine. We will be seeking legal advice in relation to how to take things forward.”
Other AOs warned of ‘fining power’
QFI entered the end-point assessment organisation (EPAO) market in 2015 to offer specialist apprenticeship assessments in areas such as civil engineering and engineering construction.
McClelland said his firm operated successfully under the regulation of the Education and Skills Funding Agency when it was listed as an EPAO for around 60 apprenticeship standards, but this changed after the 2020 decision whereby all EPAOs would need to gain recognition as an Ofqual-approved awarding body.
QFI gained Ofqual recognition in February 2021 but opted to go through the process in batches of standards.
The 200 cap was imposed by Ofqual from this point because it “considered there was an unacceptable risk that QFI might not have the resources or capacity to develop, deliver, and award qualifications which complied with the general conditions of recognition beyond a certain level of demand”.
QFI could however apply to “vary” the restrictions at any time.
Ofqual’s enforcement panel investigation found “no evidence that QFI had submitted a request to Ofqual for a variation of the thresholds” and therefore the “cap of 200 registered learners was not varied at any time”, according to today’s report.
Despite this, QFI exceeded the restriction by allowing 848 learners to be registered as of 30 April 2023 and broke the cap by assessing 237 learners in the period January 2023 to 13 July 2023.
QFI claimed it was led to believe the cap had lapsed because Ofqual did not carry out a promised review of the special condition 12 months after it was put in place.
It also and pointed out the regulator was aware the company may exceed the cap based on detailed forecasting it signed off on through successful expansion requests. QFI also argued that the cap did not apply to standards later recognised through those expansion requests.
The company claimed the special condition was only belatedly re-issued at a time when its numbers were in excess of the cap.
Ofqual’s enforcement panel hit back, stating that the special condition states “plainly that the restriction applies to QFI’s qualifications” and was not “confined to qualifications recognised at the point of recognition or any other specific point”.
Today’s report said the panel “does not consider that it is possible sustainably and realistically to interpret the condition in the way suggested by QFI”.
The panel also said even if Ofqual wrongly failed to review the special conditions, this would “not affect the application of those conditions or Ofqual’s ability to enforce those conditions, and nor would it provide a defence for QFI”.
“This is because, under Ofqual’s framework, unless the condition itself specifies a sunset provision (i.e. a provision stating the condition would expire on a set date) a special condition will remain in place until Ofqual decides to remove or vary that condition,” the report added.
August 2022 meeting notes also allegedly demonstrate QFI was aware it had not received notification about the removal of the special conditions and the company’s advisory board recommended it should seek formal notification that the conditions had been lifted, but this step was never taken.
No money left
QFI was served with an investigation report in November 2023 that detailed several alleged Ofqual breaches and imposed new conditions, including a public statement that it can’t register apprentices without special permission going forward.
McClelland said this would have left his business untenable and decided to close it down. He told FE Week there are no funds left in the company even if it agreed to pay the fine.
He said: “Ofqual has not been fair or consistent in its use of its cap-related special condition across all EPAOs; Ofqual has specifically selected QFI, a Scottish company and forced it out of the United Kingdom qualifications/apprenticeships sector; Ofqual stated the reason for this was to ‘improve compliance by other awarding organisations as it demonstrates the importance that Ofqual places on compliance with special conditions’.
“Why should QFI be held up by Ofqual as its ‘sacrificial lamb’. I just can’t believe the qualifications sector or industry accepts the actions of Ofqual as any form of quality assurance or contribution to the improvement of qualifications/apprenticeships.
“In my opinion, Ofqual is a danger to the health and wellbeing of people working within the qualifications sector.”
How QFI could avoid paying the fine
Sean Moran, partner in the restructuring and insolvency team at law firm Shakespeare Martineau, explains the next steps for QFI and Ofqual if the company stands firm on its pledge to not pay the fine.
“This is the final stage in a process commenced by Ofqual. QFI has an opportunity to make further representations and/or arguments in mitigation before the fine is confirmed by Ofqual.
“QFI is a Scottish company, so the procedures for enforcement and winding up are different to England and Wales.
“Assuming no challenge is made, and the fine is confirmed, Ofqual would need to secure a monetary order from a court in Scotland or register an order made in the English courts within the Scottish jurisdiction, allowing the instructions of Sheriff officers to serve a charge on QFI.
“If the fine remained unpaid, the charge for payment could form the basis for a petition to wind up QFI, resulting in the liquidation of the company.
“The winding up of QFI would result in the appointment of a Scottish-qualified insolvency practitioner as liquidator and they would manage the affairs of the company (collect assets, schedule liabilities, interview directors, report to creditors etc).
“The fine would rank as an unsecured claim if QFI went into liquidation.”
It sounds like QFI have been playing the mental health / victim card..
The cap on learners is not uncommon from ofqual and is unambiguous. It’s assumably in place to protect learners from a business collapsing from taking on too many!
The learners were already registered with QFI prior to Standards transitioning to Ofqual as the sole external quality assurance provider. QFI were open & transparent about learner numbers expected to transition having agreed contracts with training providers & built good relations with employers. Ofqual approved those Standards/ qualifications with learners attached during a series of expansion requests, so those learners came across with those Standards/ qualifications.