Part 2: Proposals for new initial condition E7 - Effective governance

Requirements

E7D.1 Relevant individuals at the provider must, in the OfS’s judgement, be fit and proper persons for the purposes of ensuring that:

1. the provider is suitable to access and receive public funds;
2. public trust and confidence in the higher education sector is maintained; and
3. the provider is suitable to protect the interests of students.

E7D.2 In judging whether an individual is a fit and proper person for the purposes of E7D.1, the OfS will give particular consideration to the following matters (where any of these matters apply and insofar as the matter does not fall under E7D.4):

1. the individual has been subject to any adverse findings in civil proceedings (in any jurisdiction), and those findings relate to that individual operating in a business or professional capacity;
2. the individual has been subject to any adverse findings in disciplinary proceedings by any relevant person or body (in any jurisdiction), or is currently the subject of such disciplinary proceedings;
3. the individual, or an organisation they are or have been involved in that is or has been connected to the education sector, has been subject to any adverse findings by any relevant person or body (in any jurisdiction);
4. the individual, or an organisation they are or have been involved in, has been subject to any adverse findings by any relevant person or body (in any jurisdiction) in relation to the inappropriate use of relevant public funds;
5. the individual, or an organisation they are or have been involved in, is currently the subject of an investigation by any relevant person or body in relation to the inappropriate use of relevant public funds;
6. the individual, or an organisation they are or have been involved in, has (in any jurisdiction):
   1. been refused a registration, authorisation, membership or licence to carry out a trade, business or profession (including any licences which relate to student visas); and/or
   2. had a registration, authorisation, membership or licence to carry out a trade, business or profession revoked, withdrawn or terminated (including any licences which relate to student visas); an organisation that the individual is or has been involved in, has been convicted of the offence provided for in section 199 of the Economic Crime and Corporate Transparency Act 2023 (failure to prevent fraud) or any relevant fraud offence, or a similar offence in an overseas jurisdiction;
7. an organisation that the individual is or has been involved in, has been convicted of any criminal offence in relation to tax matters (in any jurisdiction);
8. an organisation that the individual is or has been involved in went into insolvency, liquidation or administration (in any jurisdiction);
9. the individual was dismissed, or was asked to resign and did resign, from a role at an organisation (in any jurisdiction) where the individual held significant managerial responsibility or influence, while operating in a business or professional capacity;
10. the individual has previously been disqualified as company director under the Company Directors Disqualification Act 1986 or an equivalent overseas regime;
11. the individual has previously been disqualified from being a charity trustee or trustee for a charity under s 178(1) of the Charities Act 2011 or an equivalent overseas regime;
12. the individual has previously been declared bankrupt (or equivalent) in any jurisdiction.

E7D.3 If any of the matters listed in E7D.4 apply to an individual, that individual will be deemed not to be a fit and proper person for the purposes of E7D.1, unless there are exceptional circumstances.

E7D.4 The matters referred to in E7D.3 are as follows:

1. at any point during the course of the provider’s application to register with the OfS (and the OfS’s consideration of that application):
   1. the individual was disqualified as a company director under the Company Directors Disqualification Act 1986 or an equivalent overseas regime;
   2. the individual was disqualified from being a charity trustee or trustee for a charity under s 178(1) of the Charities Act 2011 or an equivalent overseas regime;
   3. the individual was an undischarged bankrupt (or equivalent) in any jurisdiction;
2. the individual has been convicted of a criminal offence (excluding minor offences) in any jurisdiction, if the following apply:
   1. the conviction is not:
      1. spent for the purposes of the Rehabilitation of Offenders Act 1974; or
      2. subject to equivalent protections in an overseas jurisdiction; and
   2. where the conviction relates to an offence in an overseas jurisdiction, a similar criminal offence exists in the United Kingdom.

E7D.5 The provider must have in place policies and procedures to ensure that relevant individuals are able, by reason of their physical and mental health, to properly perform the tasks of the office or position to which they are appointed (including policies and procedures to provide reasonable adjustments or other support for relevant individuals where required under equality law).

E7D.6 The provider must have robust policies and processes in place to check that its relevant individuals are fit and proper for the purposes of E7D.1; and the provider must demonstrate that it has conducted checks for each of the relevant individuals in accordance with these processes and policies (before applying for registration).

Definitions

E7D.7 For the purposes of this condition:

1. “company director” means any individual that a company would be required to include in its register of its directors under section 162(1) of the Companies Act 2006;
2. “company secretary” means any individual that a company would be required to include in its register of its secretaries under section 275(1) of the Companies Act 2006;
3. “exceptional circumstances" means compelling circumstances which demonstrate, in the OfS’s judgement, that the individual is nevertheless fit and proper for the purposes of E7D.1; 
4. “inappropriate use" means, in respect of relevant public funds, any of the following:
1. not complying with legally binding terms and conditions that specify or restrict how funding can be used;
2. obtaining, or continuing to receive, funding in circumstances where any conditions or criteria that determine an organisation’s eligibility to receive the funding are not satisfied;
5. “involved in”, in relation to an individual’s involvement in an organisation, means that the individual held significant managerial responsibility or influence at the time when the issues giving rise to the relevant matter occurred;
6. “governing body” has the meaning given by section 85 of the Higher Education and Research Act 2017;
7. “relevant individuals" means all of the following:
1. any member of the provider’s governing body;
2. the individual proposed as the accountable officer for the purposes of ongoing condition E3;
3. the individual(s) proposed to hold overarching responsibility for the management of the provider’s financial affairs;  
4. any company director of the provider;
5. any company secretary of the provider;
6. any individual who holds more than 25% of the shares in the provider;
7. where the provider has a parent company, any individual who holds more than 25% of the shares in that parent company; and
8. any individual who would have significant overarching responsibility for ensuring that the provider complies with the ongoing conditions of registration (if registered)’;
8. “minor offences”:
1. include, but are not limited to, offences dealt with by fixed penalty notice or where the main offence is unlawful parking of a motor vehicle;
2. do not include relevant fraud offences;  
9. “parent company” has the meaning given in section 1162 of the Companies Act 2006;
10. “public body” includes any person certain of whose functions are functions of a public nature, but excluding a person exercising functions in connection with proceedings in parliament;
11. “relevant fraud offence” has the meaning given in condition E7E;
12. “relevant person or body” means:
1. any court or tribunal;
2. the Chancellor of the Exchequer;
3. any Secretary of State or Minister;
4. the OfS;
5. UKRI;
6. Research England
7. Education and Skills Funding Agency;
8. a local authority
9. Student Loans Company;
10. any professional body; and
11. any other public body;
13. “relevant public funds” has the meaning given in condition E7E;
14. “significant managerial responsibility or influence” includes, but is not limited to, serving on a board or governing body, having voting rights, or employment in a senior management position.

Summary

Applies to: all providers seeking registration 

Initial or general ongoing condition: initial condition 

Legal basis: section 5 of HERA 

Condition E7D.1 and E7D.2

1. The presence of one or more matters listed in E7D.2 will usually weigh against an individual when determining whether they satisfy the fit and proper test in E7D.1. However, the OfS will consider relevant contextual information submitted by the provider when assessing the individual.
2. In considering the matters listed in E7D.2, the OfS will normally place particular weight on matters that are:
   • Recent – The more recent a matter is, the more weight the OfS will place on it (apart from matters which are spent for the purposes of the Rehabilitation of Offenders Act 1974 or subject to equivalent protections in an overseas jurisdiction).
   • Serious – matters that the OfS considers to be serious. This includes but is not limited to matters involving financial mismanagement or impropriety, matters relating to a key individual that could be seen as bringing the higher education sector into disrepute and matters that have had a detrimental impact on students at a higher education provider.
   • Repeated or sustained – matters that occurred repeatedly or continuously over time (as opposed to a one-off incident). A combination of multiple matters that, individually, would not be sufficient for the OfS to judge that an individual is not a fit and proper person may nevertheless be sufficient when considered together. Indicative of dishonesty, negligence, financial mismanagement, or unwillingness or inability to comply with legal or regulatory requirements.
3. These factors will normally indicate that a relevant individual is not a fit and proper person. The OfS will consider these factors in combination. For example, if a serious and relevant matter occurred six years ago, it may not necessarily be ‘recent’, but it is ‘serious’ and ‘relevant’ and therefore the OfS would be more likely to judge that the individual is not a fit and proper person under E7D.1.
4. Where comparable adverse findings to those listed in E7D.2 take place outside the UK, the OfS will treat them in the same way as if such findings or proceedings had taken place within the UK.
5. Where a matter listed in E7D.2 is also listed in E7D.4, the OfS will treat such a matter as falling within E7D.4 and so subject to the initial assumption that the individual is not a fit and proper person (see below).
6. The OfS reserves the right to judge that an individual is not a fit and proper person for reasons that are not explicitly listed in E7D.2 when assessing whether a relevant individual is fit and proper for the purposes of E7D.1.

Condition E7D.2a

7. The OfS is likely to consider that an individual is not a fit and proper person if they have been subject to an adverse finding in civil proceedings, either in the UK or overseas. These proceedings must be serious and relevant to the role that the individual performs, or will perform, at the provider. ‘Serious’ means they could affect whether the provider is suitable to access and receive public funds, maintain public trust and confidence in the higher education sector and/or protect the interests of students (for example an adverse finding in a civil fraud case).
8. The OfS will give particular weight to adverse findings in civil proceedings relating to financial misconduct, fraud or related matters.
9. If the adverse finding is not serious or relevant to the role that the individual performs, or will perform, at the provider (for example if it relates to a civil planning dispute with a neighbour), the OfS is less likely to place weight on this matter.

Condition E7D.2b

10. The OfS is likely to consider that an individual is not a fit and proper person if they have been subject to any adverse findings in disciplinary proceedings by any relevant person or body (regardless of whether those proceedings occurred in the UK or overseas). ‘Relevant person or body’ is defined in the condition as any court or tribunal, the Chancellor of the Exchequer, any Secretary of State or Minister, the OfS, UKRI, Research England, a local authority, Student Loans Company, any professional body, or any other public body. ‘Public body’ includes any person who has some functions of a public nature (for example, statutory functions), but does not cover a person exercising functions in connection with parliamentary proceedings. Examples of disciplinary proceedings that may be relevant include but are not limited to fines, suspensions, expulsions or other sanctions imposed by a regulator or professional body. The OfS is likely to place more weight on disciplinary proceedings against an individual than an organisation or firm.
11. If an individual is currently the subject of disciplinary proceedings by any relevant person or body, this would carry less weight than an adverse finding. The OfS will take contextual information submitted by the provider into account when assessing information relating to an ongoing investigation and may decide to delay any registration decision until such time as the disciplinary proceedings are concluded.

Condition E7D.2c-d

12. Adverse findings by a relevant person or body (in any jurisdiction) against an individual or an organisation with which they are, or have been, involved and which is connected to the education sector may be relevant to the OfS’s judgement about whether that individual is a fit and proper person.
13. The OfS will pay particular attention to adverse findings that concern a key individual's involvement in the higher education sector. This might mean, for example, where an individual has a finding of malpractice against them by a registered qualification awarding body.
14. The OfS will consider adverse findings which relate to organisations where an individual held significant managerial responsibility or influence at the time when the issues giving rise to the relevant matter occurred (see definition of ‘involved in’). ‘Significant managerial responsibility or influence’ is defined to include (but is not limited to) serving on a board or governing body, having voting rights, or employment in a senior management position. The OfS will consider the individual’s role at the organisation and the extent (if any) of their own personal involvement in the issues giving rise to the adverse finding. Where their own involvement at the organisation is not connected to the issues giving rise to the adverse finding, the OfS will take this into account.
15. Adverse findings related to the inappropriate use of relevant public funds are likely to be highly relevant to whether the OfS considers an individual to be a fit and proper person.
16. The OfS is likely to find that an individual is not fit and proper even if the finding is old.
17. If an individual has been found to have committed fraud offences at any time, it is highly likely that the OfS will not consider that the individual is a fit and proper person.

Condition E7D.2e

18. If an individual, or an organisation in which they are or have been involved, is currently subject to a regulatory investigation (in any jurisdiction), this would carry less weight than a formal (adverse) finding arising from an investigation. The OfS will consider contextual information submitted by the provider and may delay any registration decision until the investigation is concluded.

Condition E7D.2f

19. The OfS is likely to consider an individual not to be fit and proper where a refusal, revocation, withdrawal or termination of registration, authorisation, membership, or license  for reasons which are relevant to OfS regulation. Reasons relevant to OfS regulation may include but not be limited to:
    1. Refusal, revocation, withdrawal or termination due to dishonesty, lack of willingness or ability to comply with regulatory requirements, mismanagement of public funds, or financial mismanagement.
    2. Refusal, revocation, withdrawal or termination to practice in a business connected to the education sector.
20. Reasons which are not relevant to OfS regulation are likely to include, but are not restricted to:
    1. Reasons of health.
    2. Deficient professional performance in unrelated sectors.
    3. Failure to comply with continuing professional development requirements.
21. The OfS will consider findings that relate to organisations at which an individual held significant managerial responsibility or influence at the time when the issues giving rise to the relevant matter occurred (see definition of ‘involved in’). ‘Significant managerial responsibility or influence’ is defined to include, but not be limited to, serving on a board or governing body, having voting rights, or employment in a senior management position.
22. The OfS will consider the individual’s role at the organisation and the extent (if any) of their personal involvement in the issues giving rise to the adverse finding. Where their own involvement at the organisation is not connected to the issues giving rise to the adverse finding, the OfS will take this into account.

Condition E7D.2g

23. The OfS will give particular weight in its assessment of whether an individual is a fit and proper person where the individual held significant managerial responsibility or influence within an organisation at the time when issues giving rise to the organisation being found guilty of an offence under section 199 of the Economic Crime and Corporate and Transparency Act 2023 occurred (see definition of ‘involved in’). ‘Significant managerial experience or influence’ is defined to include (but is not limited to) serving on a board or governing body, having voting rights, or employment in a senior management position. Conversely, the OfS is likely to place less weight on the offence where the key individual was in a role at the organisation in question which was unrelated to the matters that led to the conviction under section 199 of the Economic Crime and Corporate Transparency Act 2023.
24. The OfS will consider the individual’s role at the organisation and the extent (if any) of their personal involvement in the issues giving rise to the adverse finding. For example, where an individual held a senior role within the finance or compliance team of the organisation at the time when matters leading to the conviction took place, the OfS is likely to place more weight on this matter and find that the individual is not a fit and proper person. Whereas, if the individual held a junior position or a role unrelated to the issues the OfS is unlikely to place weight on this matter.

Condition E7D.2h

25. Organisations can commit criminal offences in relation to tax matters. For example, in the Criminal Finances Act 2017, two corporate criminal offences were introduced in relation to the facilitation of UK and non-UK tax evasion.
26. The OfS will give particular weight in its assessment of whether an individual is a fit and proper person where the individual held significant managerial responsibility or influence within an organisation at the time when issues giving rise to the organisation being found guilty of an offence in relation to tax matters occurred. ‘Significant managerial experience or influence is defined in the condition.
27. The OfS will consider the individual’s role at the organisation and the extent (if any) of their personal involvement in the issues giving rise to the organisation being found guilty of an offence in relation to tax matters. For example, where the individual held a senior role in the finance department or was responsible for signing off the organisation’s financial statements at the time the matters that led to the criminal conviction took place, the OfS is likely to place considerable weight on this factor and find the individual is not a fit and proper person. Whereas, if the individual held a role such as Head of Human Resources and had no oversight of the matters that led to the criminal conviction, the OfS is unlikely to give weight to this matter.

Condition E7D.2i

28. The OfS will give particular weight in its assessment of whether an individual is a fit and proper person where the individual held significant managerial responsibility or influence within an organisation at the time when issues giving rise to the organisation going into insolvency, liquidation or administration (in any jurisdiction) occurred. ‘Significant managerial experience or influence is defined to include (but is not limited to) serving on a board or governing body, having voting rights, or employment in a senior management position. Conversely, the OfS is likely to place less weight on the offence where the key individual was in a role at the organisation in question which was unrelated to the matters that led to the organisation going into insolvency, liquidation or administration.
29. The OfS will consider the individual’s role at the organisation and the extent (if any) of their personal involvement in the issues giving rise to the organisation going into insolvency, liquidation or administration.
30. The OfS will give significant weight in its assessment of whether an individual is a fit and proper person where the organisation that went into insolvency, liquidation or administration was a higher education provider or organisation that delivered higher education and where the impact of going into insolvency, liquidation or administration harmed students’ interests (or would have done so but for the involvement of external public funding assistance).
31. Where an individual was a director of the organisation that went into liquidation, the OfS will consider whether the individual was subsequently disqualified as a director under regulation E7D2.k (see below).

Condition E7D.2j

32. The OfS is likely to place weight on dismissal or resignation from a role while operating in a business or professional capacity, particularly where this relates to fraudulent behaviour, theft, financial mismanagement, gross misconduct or academic misconduct.
33. An individual is less likely to be judged not to be fit and proper for the purposes of E7D.1 if their resignation or dismissal was for reasons irrelevant to the regulation of the OfS, for example due to ill health, a company re-organisation or redundancy.

Condition E7D.2k

34. The OfS may place weight on the fact that an individual has previously been disqualified as a company director under the Company Directors Disqualification Act 1986 or an equivalent overseas regime, despite such disqualification having ended. When considering such matters the OfS will consider whether the reasons for such disqualification were serious and/or relevant to the role now being held, or to be held, by the key individual at the provider. The OfS will also take into account the professional actions of the individual since the relevant disqualification as a company director.
35. The OfS will consider disqualifications under the Company Directors Disqualification Act 1986 regardless of whether these were effected by court order or undertaking.
36. Where an individual was disqualified as a company director at any point during the provider’s application to register with the OfS (and the OfS’s consideration of that application), the OfS will apply the test set out in E7D.3. The individual will be deemed not to be a fit and proper person for the purposes of E7D.1, unless there are exceptional circumstances as defined in the condition.

Condition E7D.2l

37. The OfS may place weight on the fact that an individual has previously been disqualified from being a charity trustee or trustee for a charity under section 178(1) of the Charities Act 2011 or an equivalent overseas regime, despite such disqualification having ended.
38. When considering such matters the OfS will consider whether the reasons for such disqualification were serious and/or relevant to the role now being held, or to be held, by the relevant individual at the provider. The OfS will also consider the professional actions of the individual since the relevant disqualification as a charity trustee or trustee for a charity.
39. Where an individual was disqualified from being a charity trustee or trustee for a charity at any point during the provider’s application to register with the OfS (and the OfS’s consideration of that application), the OfS will apply the test set out in E7D.3. The individual will be deemed not to be a fit and proper person for the purposes of E7D.1, unless there are exceptional circumstances as defined in the condition.

Condition E7D.2m

40. Bankruptcy is a legal process which allows individuals to deal with debts they cannot pay. In some circumstances it may indicate financial mismanagement or fraudulent activity.
41. The OfS may place weight on the fact that an individual has previously been declared bankrupt (or equivalent, such as sequestration in Scotland) in any jurisdiction, despite such bankruptcy having now been discharged.
42. When considering such matters, the OfS will consider whether the reasons for bankruptcy were serious and/or relevant to the role now being held, or to be held, by the key individual at the provider. The OfS will also consider the professional actions of the individual since the relevant bankruptcy was discharged.
43. Where an individual was an undischarged bankrupt (or equivalent) in any jurisdiction at any point during the provider’s application to register with the OfS (and the OfS’s consideration of that application), the OfS will apply the test set out in E7D.3. The individual will be deemed not to be a fit and proper person for the purposes of E7D.1, unless there are exceptional circumstances as defined in the condition.

Condition E7D.3 and E7D.4

44. If an individual is disqualified from acting as a company director, charity trustee or trustee for a charity at any point during the course of the provider’s application to register with the OfS (and the OfS’s consideration of that application), the OfS will judge that the individual is not fit and proper for the purposes of E7D.1, unless there are exceptional circumstances.
45. This will be the case regardless of whether the period of the disqualification expires during the period of the registration application.
46. The OfS will consider disqualifications under the Company Directors Disqualification Act 1986 regardless of whether these were effected by court order or undertaking.
47. Where a comparable disqualification that falls under this regulation has taken place outside of the UK in an equivalent regime, it will be treated by the OfS in the same way as if such a disqualification had taken place within the UK.
48. The OfS will consider any mitigating information submitted with the provider’s registration application before reaching this judgement. When considering such mitigation, the OfS will judge an individual as being fit and proper for the purposes of E7D.1 only if it is satisfied that there is evidence of an exceptional circumstance as defined in E7D.7.
49. If an individual is currently an undischarged bankrupt (or its equivalent in another jurisdiction, for example, sequestration in Scotland) or becomes an undischarged bankrupt (or its equivalent in another jurisdiction) during the application process up to the OfS’s final registration decision, the OfS will judge that the individual is not fit and proper for the purposes of E7D.1, unless there are exceptional circumstances.
50. This will be the case regardless of whether the bankruptcy is due to become discharged during the period of the registration application.
51. The OfS will consider any mitigating information submitted with the provider’s registration application before reaching this judgement. When considering such mitigation, the OfS will judge an individual as being fit and proper for the purposes of E7D.1 only if it is satisfied that there is evidence of an exceptional circumstance as defined in E7D.7.
52. Unless there are ‘exceptional circumstances’, the OfS will judge an individual not to be fit and proper for the purposes of E7D.1 if they have been convicted of a criminal offence (in any jurisdiction) and that conviction is unspent for the purposes of the Rehabilitation of Offenders Act 1974 (or not otherwise subject to equivalent protections in an overseas jurisdiction) and, in the case of overseas convictions, a similar offence also exists in the United Kingdom.
53. The exception to this is minor offences, as defined in regulation E7D.7.
54. The OfS will consider any mitigating information submitted with the provider’s registration application before reaching this judgement.

Condition E7D.5

55. The OfS requires policies and procedures to be in place to ensure that individuals are able, by reason of their mental or physical health and after reasonable adjustments, to properly perform the tasks of their office or position. While it will be for each provider to determine the most appropriate policies and procedures for its own organisation, these may include:
    1. An appropriate means of determining whether a key individual is unable to properly perform their role and a way to raise concerns.
    2. Clear authority for a certain individual to delegate authority on behalf of another who is unable to act for any reason.
    3. A process for the delegation of authority and the identification of suitable individuals to whom authority may be delegated.
    4. The length of the period that an individual is unable to properly perform their role, after which authority must be delegated.
56. The OfS expects a provider to develop and implement these policies in a manner which is compliant with equality law, for example, by ensuring that reasonable adjustments or other support is offered to individuals where required under equality law.

Condition E7D.6

56. This requirement relating to a provider’s processes sits alongside the requirement that key individuals are fit and proper persons. A provider will be required to provide information about its policies and processes and the results of the checks it has undertaken for key individuals to the OfS when applying for registration. It will also be required to submit information that allows the OfS to complete its own checks where appropriate, including details relating to the provider’s relevant individuals and a declaration stating whether the provider is aware of any indicative matters as listed in E7D.2 and E7D.4 for any relevant individuals. The OfS will draw on this information in making its judgements about both E7D.1 and E7D.6.
57. While it will be for each provider to decide on the manner of the checks it will undertake, providers must ensure that its key individuals are fit and proper in the OfS’s judgement. The following is a non-exhaustive list of examples of the type of checks that providers may undertake:
    1. UK criminal record checks via a DBS check and, where relevant, a similar check in relevant overseas jurisdictions.
    2. References from previous organisations with which an individual has been involved.
    3. Checks made against Companies House disqualified directors register (and where relevant its equivalent overseas regimes).
    4. Checks made against the individual Insolvency Register in the UK (and where relevant its equivalent overseas regimes).
    5. An individual’s self-declaration in relation to the matters listed in this condition.
    6. Credit reference checks.
    7. Regulatory body lists of non-compliant individuals and companies, for example the Solicitor’s Regulation Authority’s list of intervened companies and sole practitioners.
    8. General background checks using other publicly available sources.
    9. A code of conduct which sets out expected behaviour and a process for dealing with breaches of the code.
    10. Policies that relate to good conduct and encourage individuals at the provider to raise relevant concerns in relation to matters such as anti-bribery and fraud.
58. Regardless of whether a provider has undertaken a check for a relevant individual, if the OfS decides that a relevant individual is not a fit and proper person for the purposes of condition E7D.1 in accordance with this guidance, the provider’s application for registration will be refused.
59. Where a provider has not undertaken a check for a relevant individual or has undertaken a check that that the OfS decides is not appropriately robust, the OfS may refuse the provider’s application for registration.