Proposals for reforms to OfS registration requirements

1. This consultation is structured as follows:
   • Introduction
   • Part 1: a new initial condition relating to treating students fairly (condition C5)
   • Part 2: a new initial condition relating to effective governance (condition E7)
   • Part 3: changes to the requirements for a registration application.
2. The introduction sets out the background to our proposals. It explains the context for each of the three separate following parts and why we think it is appropriate to focus on the registration requirements for new providers, including the tests we apply in relation to consumer protection and governance. The introduction also explains how we would implement these proposals and invites the views of respondents on this.
3. In each of Parts 1, 2 and 3, we explain in more detail the changes we are proposing, the reasons we are proposing to make those changes and what we expect them to achieve. We also set out the alternatives we have considered in formulating our proposals.
4. Respondents can read and respond on each part separately and can comment on all, or some, of the questions. Where respondents make points that are relevant to more than one proposal in the consultation, we will take these points into account wherever they appear. For example, we will consider comments relevant to the registration proposals in Part 3 if they appear in response to a question about one of the proposed initial conditions, or vice versa.
5. This consultation constitutes our consultation for the purposes of sections 5(5) and 75(8) of the Higher Education and Research Act 2017 (HERA). When formulating our proposals, we have had regard to relevant matters including:
• our general duties under section 2 of HERA
• the Public Sector Equality Duty
• statutory guidance from the Secretary of State
• the Regulators’ Code.
6. We are running this consultation in accordance with the government’s consultation principles.^[6]
7. Annex A sets out a list of all the questions in the consultation. Annex B sets out in more detail matters to which we have had regard in formulating our proposals.

[6] See Consultation principles - GOV.UK.

8. We are consulting on changes to our initial (entry) conditions of registration relating to consumer protection and governance.
   1. Part 1 of this consultation proposes a new initial condition of registration – Condition C5: Treating students fairly.
   2. Part 2 of this consultation proposes a new initial condition of registration – Condition E7: Effective governance.
9. In proposing to introduce these two new initial conditions of registration, we are also proposing to remove four existing initial conditions. These are set out in Table 1 below. We are also proposing that we would disapply ongoing condition C3 for a provider that has been registered after being successfully tested against new proposed initial condition C5.
10. Part 3 of this consultation proposes changes to the requirements for a registration application.
11. Table 1 below sets out the existing initial conditions and the changes we are proposing.

Table 1: Summary of proposed changes to the initial conditions of registration

12. The ongoing requirements for providers that are already registered with the OfS will remain unchanged. However, during the current strategy period we will engage with the sector to discuss the features of effective governance and consider where standards need to be raised. As part of this work we may consider whether any changes to the ongoing conditions relating to management and governance are necessary. Similarly, we plan to consider our approach to student protection for registered providers and will want to ensure a consistent level of protection for students at all providers. Proposals to align ongoing requirements for all registered providers, to ensure that all students are treated fairly on an ongoing basis, would form part of a future consultation.

13. English higher education providers may choose to register with the OfS to access the benefits of registration. Depending on the category of registration, these include:
    • students studying at the provider being able to access the student finance system
    • access to OfS public grant funding
    • eligibility to apply for a UK Visas and Immigration student sponsor licence to recruit international students.
14. Registration therefore sets the bar for entry to the regulated sector and access to significant public and student funding. It is essential that the regulatory tests we set at registration protect students and taxpayers and effectively identify those providers not yet ready to enter the regulated sector. It is also important that they facilitate efficient entry to the regulated sector for high quality, sustainable and innovative institutions that increase the diversity of the sector and the options on offer for students.
15. Since 2018 we have revised some of our initial and ongoing conditions of registration, including those relating to quality and standards, to more appropriately reflect the context for a provider that may not yet have delivered higher education. We have seen the benefits of these changes in how we assess quality and standards for providers seeking registration. However, many elements of our registration tests, including our initial conditions of registration for consumer protection and management and governance, have not changed. These are the focus of this consultation.
16. We explain below why the key risks now affecting the higher education sector, the changes in the providers seeking registration, and what we have learned from registering and regulating new providers, have led us to develop the proposals in this consultation.

Key risks affecting the higher education sector

17. Financial sustainability is the most significant, growing, challenge for the English higher education sector. In November 2024, the OfS published an analysis of the financial sustainability of higher education providers in England which suggested that up to 72 per cent of providers could be in deficit in the 2025-26 financial year if they fail to make changes in response to student recruitment patterns.⁷ This worsening financial position is driven by a number of factors, including a decline in the real-terms value of income from UK undergraduates against increasing costs, and changes in student recruitment, particularly for international students.
18. We have also seen an increase in the scale of provision being delivered through subcontractual partnerships, including as lead providers explore new business models to manage financial risks. We have seen an increase in risks of public and student funding being misused or not providing value for money. These risks have primarily arisen in relation to subcontractual (also known as franchise) arrangements. This is where a registered provider (lead provider) subcontracts delivery of its teaching to a partner (delivery provider). The delivery provider may or may not be registered with the OfS. The NAO investigation into student finance for study at franchised higher education providers⁸ and Public Accounts Committee report on the same subject,⁹ emphasised the risk to students and public funds where there is inadequate management and governance of partnerships and other relationships, such as third-party recruitment agents. These risks would be significantly reduced if a lead provider and delivery provider have appropriate management and governance arrangements in place.
19. The OfS’s Insight brief into subcontractual arrangements in higher education¹⁰ published in September 2024, identified over 100 unregistered providers delivering higher education on behalf of registered providers, accounting for almost a third of delivery providers with such arrangements. We have seen increased regulatory risks in this area, including risks to quality, that public funds are not used appropriately and that students receive inadequate support to enable them to access and succeed on their course. These risks often occur in conjunction with inappropriate advertising, marketing and recruitment of students.
20. Meanwhile, students continue to face challenges. The cost of living continues to rise, which affects students’ ability to access and benefit from their higher education. The effects of disruption to students’ studies in recent years, from the coronavirus pandemic and associated lockdowns, and industrial action in the sector, also remain with us.
21. As we set out in our recent strategy consultation,¹¹ students deserve to receive what they are promised by their provider when they choose their course. Many students we talked to over the summer of 2024 expressed this as the most basic condition of fair treatment. The National Student Survey shows that most students have positive experiences of higher education.¹² However, the growing number of complaints submitted to the Office of the Independent Adjudicator supports evidence from our student insight work that not all students benefit in the ways they expected.¹³ Through our regulation, we have seen unclear and unfair contractual terms and conditions, providers charging additional fees and misleading information, all of which can compromise students’ experience of, and ability to engage in, higher education.
22. As risks in their operating environment increase, providers will need different capabilities to manage challenging circumstances and affect positive change. In an environment of increased risk, effective governance is therefore critical to serving the interests of students, and critical too for ensuring universities and colleges are secure guardians of the public funding they receive.

Providers seeking registration

23. When the OfS was first created, most providers seeking registration were established universities and colleges. These providers often had many years of experience delivering higher education and interacting with some regulatory requirements. Several years later, we are now much more likely to receive applications from providers new to regulation. Some, though not all, do not have a track record of delivering higher education. Our experience is that the requirements set out in our original initial conditions are not as well suited to the circumstances of these providers and so we need different, more tailored, tools to address the risks to students at these providers.
24. Wider developments in the English higher education sector mean that we are expecting an increased number of providers to seek registration in the coming years.
25. The Lifelong Learning (Higher Education Fee Limits) Act 2023 introduces significant changes to the student finance system, giving eligible learners access to tuition fee and maintenance loans for modules and short courses, as well as full courses such as degrees.
26. The OfS will regulate all provision funded by the LLE. This means that any provider wanting to offer courses funded by the LLE from January 2027 will need to be registered. This requirement is likely to increase the number of providers seeking registration. While some of these providers will have a track record of delivery and models of provision similar to those of currently registered providers, some may have models that are quite different. We need to ensure that our initial conditions provide an appropriate test for registration for these providers.
27. The Department for Education is consulting on proposals that would see some delivery providers in subcontractual relationships required to register with the OfS. Some delivery providers will be offering high quality education in well governed and managed institutions and it is important that these providers are able to register without undue barrier. In view of the known risks relating to some subcontractual provision though, it is essential that our registration tests can identify any provider that is not set up in a way that can and will mitigate these risks.

What we have learned from registering and regulating new providers

28. Since 2018 we have registered more than 400 providers. New entrants have enriched the sector, and introduced high quality courses, innovative approaches and extended choice for students.
29. However, we have encountered issues where newly registered providers are not sufficiently prepared to comply with the requirements in place after registration. In a small but significant minority of cases, providers have been unable to compile important financial information in a timely manner, or return accurate data to the designated data body or the Student Loans Company (SLC). This creates risks for students where the OfS is unable to properly fulfil its monitoring role to identify financial risks or poor quality courses, and cannot put in place timely interventions to manage these risks.
30. We have also seen governing bodies that lack the skills and experience to navigate the challenges facing their organisation and to act in the interests of students. Weaker governing bodies are less able to anticipate and respond to risks, putting their students’ education at risk.
31. We have seen evidence of optimism bias in the financial forecasts providers submit with their registration application, which assume, for example, that once registered a provider will substantially increase student numbers. In practice we find that many providers, particularly those that have not previously delivered higher education, significantly underrecruit against their forecasts. An increasingly adverse financial position after registration may compromise the staffing and resources a provider needs to deliver high quality education and, if it is not well managed, may result in the provider closing.
32. In some cases, we have seen providers presenting governance arrangements at registration which appear to meet our requirements for transparency and external scrutiny, but which turn out to not represent how the provider takes decisions in practice nor who is responsible for those decisions.
33. It is therefore essential that our initial conditions more explicitly test whether a provider is ready to meet our ongoing regulatory requirements and ensure that only well-prepared providers can register. Taking into account these factors, we are proposing changes to our initial conditions to respond to the increasing risks we are seeing in the sector, and the increasing diversity of providers seeking registration.
34. It is also important that the registration process itself is set up in the best way for the different types of providers that are now seeking registration. We know many providers invest considerable time and effort in applying for registration and demonstrating that they meet the OfS’s requirements. However, we continue to spend considerable time assessing applications that are not well prepared, and this affects our ability to focus resources on those applications that are. We are therefore proposing changes to the requirements for a registration application to improve the overall quality of applications and thereby improve the efficiency of the registration process.

[7] OfS website, Financial sustainability of higher education providers in England: November 2024 update.

[8] See Investigation into student finance for study at franchised higher education providers.

[9] See Student loans issued to those studying at franchised higher education providers.

[10] OfS website, Subcontractual arrangements in higher education.

[11] OfS website Consultation on OfS strategy for 2025 to 2030.

[12] OfS website, National Student Survey data: provider-level data for 2024, all modes of study.

[13] OIA, Annual report 2023.