The implications of a pause in OfS regulatory functions  

The announcement that the Office for Students’ (OfS) is pausing some aspects of its regulatory functions to focus on financial sustainability among registered providers raises immediate and longer-term problems.

It immediately affects those wishing to register with the OfS or applying for degree-awarding powers (DAPs) or university title (including some that are in progress). It also has implications for the future of regulation of higher education more widely.

The legality of this decision is questionable in the first place. The higher education and research act states that the OfS “must” register an institution if certain conditions are met, one of which is that the application is made in the manner specified by the OfS.

The OfS has used its power to specify a manner of application to impose a moratorium on submissions for 10 months, which may be extended. If their approach is correct, it could pause its duty to register indefinitely, which would completely undermine the mandatory nature of the duty.

But it cannot have been the intention of parliament that the regulator could “specify the manner” of application in this way, particularly in relation to those who have already applied.

The powers to authorise DAPs and university title are discretionary rather than mandatory duties, but other cases of a blanket refusal to exercise a discretionary power (even temporarily) have been found unlawful.

Colleges who are applying for DAPs or seeking to have their DAPs extended or varied could challenge the pause.

Preparing for such applications is time-consuming and costly. Business plans are based on securing or varying these at particular points in time. A delay will inevitably result in wasted expense and, in some cases, push affected providers towards financial difficulties.

This primarily affects those who are directly impacted, but the registered sector as a whole would benefit from confidence in the lawfulness of the regulator’s actions.

There are wider implications too.

First, it does not exactly inspire confidence in registered providers as a group that the regulator has declared itself unable to carry out its statutory duties and functions because it is overwhelmed by its work in managing financial risks.

There needs to be an urgent and strategic review

Second, the public accounts committee considered the risks associated with fraud through franchised providers earlier this year. One of its recommendations was requiring such providers to register with the OfS as a means of safeguarding student and taxpayer interests.

It appears that this important recommendation cannot now be pursued until at least August 2025, leaving students affected by fraud and financial instability unprotected. And if the OfS can switch off its registration duties at will, it may not be a viable option at all.

Third, the OfS currently has several, possibly dozens, of open investigations into concerns about quality and standards and other matters, some of them affecting colleges. Some of these have been open for over two years.

It is difficult to see how it can direct appropriate resources to these given how all-encompassing its work on financial sustainability appears to be, although it has said other strands of work are unaffected.

Meanwhile, the OfS continues to amass additional responsibilities: lifelong learning, harassment and sexual misconduct and, if or when it is implemented, extensive duties under the higher education freedom of speech act 2023.

Given this new development, there is little to inspire confidence in its ability to do all of these things well.

There needs to be an urgent and strategic review of whether this regulatory system can withstand all the pressure it is asked to bear.

The final question is what exactly the OfS is doing to address the financial challenges facing the sector.

Its focus seems to be on reacting to individual providers in financial distress.  Given that it predicts nearly three-quarters will be in difficulty, it should review how it could be more proactive in helping the sector as a whole.

Generally, reducing the regulatory burden would help, but there are three specific areas where the OfS could be most impactful:

1. Guide and support governing bodies in overseeing effective responses to financial challenges.
2. Provide clear and realistic guidance on how it will assess quality and standards and consumer protection conditions when providers are rapidly responding to financial difficulties.
3. Review and radically improve or replace its student protection regime. We’ve known since 2019 that many plans were not of good quality, and its own processes for approving revisions are slow and cumbersome.