Higher education providers face strengthened governance requirements under OfS proposals

Rhiannon Woodhouse and Gayle Ditchburn were commenting on the proposal relating to a new condition for registration (E7), which is concerned with effective governance. The new condition E7 will replace the current initial conditions E1 and E2, concerning governance and management, at the point of registration. After this, the new provider will be subject to the existing ongoing conditions E1 and E2.

The proposal suggests changing the assessment of governing documents at registration, replacing the current self-assessment requirement with a direct assessment of specified governing documents.

Rhiannon Woodhouse, higher education specialist at Pinsent Masons, said: “The aim here is to ensure that the governing body and management team of the provider can demonstrate that they understand the regulatory conditions and can effectively run the higher education provider, rather than the OfS simply relying on providers’ written self-assessments. Welcome news is that the OfS are proposing that the one size fits all governance model is no longer suitable for the sector and instead, one which is appropriate to the size and complexity of the provider will be encouraged.”

The assessment of compliance with proposed condition E7 will focus on documents related to the workings of the governing body and associated processes. This includes governing body documents, risk and audit documents, and a conflict of interest policy. The proposal includes setting minimum standards for document clarity and consistency, limiting the scope of required documents to those governing the highest tiers of decision-making, and requiring a conflict of interest policy.

Under the proposal, providers will be obliged to ensure that their governing documents uphold the OfS’ public interest governance principles and that their management and governance arrangements deliver these principles in practice. The OfS will assess the deliverability of these arrangements through engagement with senior leaders and governing body members. The OfS is proposing to interview key individuals at the institution to test their understanding of the relevant areas of the institution and governance framework. The proposal also makes the existing reference to “fit and proper persons” in the public interest governance principles much more explicit, to ensure that institutions put in place robust internal processes for new appointments and the OfS can undertake checks to ensure such individuals are in fact fit and proper to run the institution.

Additionally, every new higher education provider application must submit a five year business plan reflecting its medium term planning, with the proposal further emphasising the need for appropriate arrangements tailored to the provider’s size, complexity and context.

Gayle Ditchburn, higher education expert at Pinsent Masons, said: “The guidance which the OfS propose as the basis for the preparation by providers of their application business plans will undoubtedly be well received by prospective applicants. Clarity of OfS expectations as to what should be included in a provider’s business plan will hopefully lead to shortened registration processes as less queries will then follow.”

The proposals will not apply retrospectively to already registered providers and are currently set to only apply to new applications made after publication of the OfS decision following the consultation, meaning providers who have submitted an application for registration before the date of publication will not be subject to the measures under the new proposals. However, it is anticipated that the decision will coincide with the re-opening of the OfS application portal in August.

“However, existing registered institutions may also wish to consider whether their current processes, policies and procedures align with what the OfS is proposing for new applicants, as this may affect future regulatory changes, given that the OfS has stipulated its ultimate goal to align ongoing requirements for all registered providers,” said Ditchburn.

This comes alongside a further proposed condition which will require higher education institutions to provide students with clear, accessible information about any changes to their courses. This proposal will also work to ensure a fair process for refunds, compensation and complaints to ensure students receive a high-quality education. The proposals also remove the student protection plan, with the new condition for registration aiming to provide a more robust and comprehensive approach, making the separate student protection plans redundant.