Part 3: Proposals for changes to registration application requirements

Current arrangements

1. We have considered maintaining our current approach, which would avoid implementing any substantive changes and rely on the existing guidance to set out to providers how to submit applications. For the reasons set out in the consultation, we think changes are needed.

Enhanced pre-application support

2. We also considered attempting to improve the efficiency of the registration process only through non-regulatory measures, such as enhanced pre-application support. We have provisionally discounted this approach because while some targeted support may be sufficient to enable many providers to submit well-prepared applications, our experience is that this would not be sufficient for all providers. The OfS does not have a remit nor the resources to provide the kind of intensive support that some applicants would need to comply.

Current arrangements

3. We considered not requiring a provider to undertake financial scenario planning as part of the registration application due to the added burden this creates. However, in light of the financial challenges we are seeing in the higher education sector and overly optimistic forecasting of student recruitment, we think that any increase in burden is outweighed by the additional protection that submitting financial scenario planning will ultimately give to students and taxpayers by ensuring that the OfS only registers providers that can demonstrate they will remain viable and sustainable under adverse but realistic financial conditions.

More flexible scenario planning

4. We considered a more flexible approach to financial scenario planning according to the size and context of the provider (for example, that the provider could detail its own scenarios in its financial submission). We have provisionally discounted this approach because we think that a prescriptive approach is necessary to ensure that a provider considers the scale of the real financial risks that are occurring in the higher education sector. This helps ensure that the assessment of risk is not distorted by overly optimistic views on student recruitment, for example.

Current arrangements

5. We considered the option of continuing the current approach of requesting updated financial data from providers on a more ad hoc basis during the course of the application process. We have initially discounted this option because we think this approach causes uncertainty for a provider about when financial updates might be requested, which we think is more burdensome than a clear upfront requirement.

Only requesting confirmation of any changes

6. We considered an option of requesting confirmation from a provider shortly prior to making a registration as to whether anything had changed (or that nothing had changed) with respect to its financial position or forecasts since its initial submission. Our provisional view and our experience of registration is that it would be highly unlikely that nothing had changed over a period of almost one year, particularly in light of the volatility we are seeing in the financial operating environment. Therefore, such a request would be likely in the vast majority of circumstances to result in confirmation that the provider’s position or forecasts had changed, triggering the need for the provider to then submit further information to clarify these changes. We would be likely to request this information in the form of updated financial and student numbers tables.

Submitting information only at the end of the registration application

7. An alternative option considered was not requiring the financial and student numbers tables as part of a provider’s initial application. Instead, this information would only be required towards the end of the registration assessment, prior to a final registration decision. While this approach could reduce the initial administrative burden on a provider, we think that requiring financial and student number data only at the conclusion of the registration process risks delaying identification of critical issues as part of our assessment of whether a provider satisfies initial condition D. Early identification of risks enables the OfS to request further clarification during the assessment. Identifying early that a provider does not satisfy initial condition D of registration may also avoid that provider paying for and undergoing a quality and standards assessment in a situation in which it will ultimately be refused registration.

Current arrangements

8. Similarly to Proposal 2b, we considered the option of continuing the current approach of requesting updated audited financial statements from providers on a more ad hoc basis (as they become available) during the course of the application process. We have initially discounted this option because we think this approach causes uncertainty for a provider about when this information might be requested, which is often more burdensome in practice than a clear upfront requirement.

Unaudited financial data

9. We considered whether requiring unaudited financial data from a provider for financial years completed after its application submission but before the registration decision would achieve our aim. This approach would not be as burdensome for a provider as it would not need to undergo the process of commissioning an external audit for this period during the registration assessment period. A further advantage of this approach is that unaudited data can often be prepared and submitted more quickly than audited financial statements.
10. We have provisionally discounted this option as we do not think it will enable us to achieve our aim because:
    1. Unaudited financial statements lack the rigor and reliability of the independent verification provided by an audit.
    2. A provider may use different standards or methods for preparing unaudited data, which means the OfS cannot place the same reliance on such data as it can on data audited according to accepted accountancy standards.
    3. Relying on unaudited data could raise the risk of registering providers that are in fact financially unviable or unsustainable, which may adversely affect students and erode confidence in the sector.

Longer deadline

11. We also considered the option of a longer deadline for submitting audited financial statements. While this would reduce administrative pressure for providers, it reduces the effectiveness of the information in informing OfS decision making and increases the risk of registering a provider that is not financially secure.

Current arrangements

12. We considered maintaining the status quo and only requiring providers to submit a completed application form and governing documents relevant to the assessment of initial condition E1 and E2 (according to existing requirements) or proposed initial condition E7 (if we adopt the proposals in relation to E7 set out in Parts 1 and 3 of this consultation). Our provisional view is that this would not resolve the increased length of time sometimes required for the OfS to understand a provider’s corporate structure where it is particularly complex.

Current arrangements

13. We have considered maintaining our current approach whereby we do not request (any) information about recent or current investigations a provider is subject to when it applies to be registered. However, our initial view is that maintaining the current arrangements would not enable us to achieve our aim of ensuring we have all information relevant to our assessment of a provider’s registration application when it submits its application.

Risk-based disclosure

14. We considered the option of risk-based disclosure requirements where a provider would be required to disclose only investigations it judged were likely to have a material impact on the OfS assessment. While this could reduce the burden on a provider by reducing the number of potential investigations it would need to submit information about, the need for providers to make a judgement about materiality could lead to either honest misinterpretation or deliberate underreporting of relevant matters. Our initial view is that it would not achieve our aim of having all information relevant to the OfS’s assessment.

Narrower requirements

15. We considered proposing narrower disclosure requirements such as:
    1. requiring disclosure of all current investigations but only historical investigations where they resulted in sanctions
    2. only requiring investigations by certain bodies, relating to certain subjects, or that led to certain sanctions.
16. Our initial view is that while this could reduce burden on providers, ensuring that all matters most likely to be relevant were captured would be likely to require complex and extensive guidance. Even with such guidance in place, there would be an increased risk of relevant issues not being shared with the OfS, either inadvertently or deliberately.

Alternative time periods

17. We considered whether introducing the requirement but with an alternative time period (within which we would require investigation information) would enable us to achieve our aim. The choice of timeframe for requiring disclosure of investigations directly affects the scope of information the OfS would receive from a provider.
18. We considered the option of a shorter timeframe of 24-36 months, which would highlight only more recent issues. This would potentially allow the OfS to assess the provider’s current status and practices without having to spend time considering older, resolved matters. We considered that this option could be less burdensome for a provider and the OfS. We also considered the disadvantages of this option where a shorter timeframe might omit investigations that reveal long-standing systemic problems or issues that continue to affect the provider. The lifecycle journey of students at a higher education provider can span five or more years, so we think the proposed time frame will help us understand the likely risks to student outcomes at the provider. If a provider faced significant investigations or sanctions five years ago (for example, related to governance, financial mismanagement, or quality assurance), the consequences might still affect current or recent students. We think that this option could limit the context available to the OfS in assessing the risk of recurring issues and may hinder a comprehensive risk assessment.
19. We considered the option of proposing a longer timeframe of 84-120 months, which would capture a wider-ranging picture of a provider’s regulatory and investigatory history and enable the OfS to identify persistent or recurring issues over an extended period. We think that the disadvantages of a longer time period are that older investigations may no longer reflect the provider’s current operations, leadership or governance, and changes in relevant individuals could render past investigations less meaningful. Requiring a provider to disclose investigations from, for example, ten years ago could be overly burdensome, especially if records are not readily available or accessible. We think that this option would lead to a less targeted focus on a provider’s present ability to meet eligibility and conditions of registration. We therefore provisionally discounted this option.

Alternative to a section 3(5) Notice

20. We considered an alternative option to impose a requirement in a section 3(5) Notice that any provider with an open investigation would be unable to submit a registration application until that investigation was complete. Our provisional view is that this would be overly burdensome. This is because some investigations (or their findings) may be of little relevance to the OfS’s assessment of the provider’s registration application. Further, because the term ‘investigations’ can be interpreted broadly, it could incorporate routine inspection activity which is unlikely to indicate increased regulatory risk.
21. Adopting this option may therefore preclude a provider from applying for registration because it was subject to an investigation, or undergoing routine inspection activity, that was unlikely to be relevant to the OfS’s judgements about the provider’s compliance with OfS requirements and therefore the (lack of) potential regulatory risks would not justify preventing the provider from seeking registration.

Current arrangements

22. We have considered not making any changes in relation to reporting specified matters during the registration assessment period. However, as we set out in Proposal 4, where a matter has been reported late and has had a material impact on our assessment, we have had to spend further time and resources requesting and reviewing further relevant information and redoing our assessment. If matters had been reported more quickly this would have avoided us undertaking abortive work. In a small number of cases, important matters have not been reported to us at all and we have subsequently become aware of them via third party notifications. We have had to investigate these before making a registration decision, which has taken considerable time. These situations impact on our ability to plan assessment resources and to deliver assessments to predictable timelines. Providers have also sometimes not made us aware of important matters, which has created a risk that we wrongly assess that they are eligible or wrongly assess that they meet a condition of registration. We have therefore provisionally discounted this option.

Keeping applications substantively or materially up to date

23. We considered proposing a requirement for a provider to keep its registration application ‘substantively’ or ‘materially’ up to date and accurate, potentially in conjunction with directing a provider to the existing reportable events guidance to give an indication of the type of information that should be reported to us. This approach would leave the judgement about what information to share at a provider’s discretion.
24. However, the disadvantage of leaving these judgements to a provider are:
    1. This may increase the regulatory burden on a provider, if its staff spend significant amounts of time trying to determine whether particular matters are, or are not, material to the assessment of its application and therefore whether or not they should be reported.
    2. A provider may get this judgement wrong, and fail to report or deliberately not disclose important information to the OfS, which could result in wasted time for a provider and the OfS, and a provider’s registration application being refused if the information subsequently comes to light in another way.

Shorter reporting timeframes

25. We also considered the option of a shorter reporting timeframe than the proposed 28 days (for example, that matters must be reported within five or ten working days). A shorter timeframe would ensure the OfS has information in a timely manner but would impose more burden on a provider that may not be proportionate, particularly in view of the fact that if a provider fails to meet this reporting timeframe its registration application could be refused.

Alternative lengths of resubmission restriction

26. In developing our approach to introducing a resubmission restriction period, we considered alternative options. We considered alternative lengths of a resubmission restriction, of six months, nine months or 12 months.
27. In particular, we considered the option of a 12-month resubmission restriction period which we think could have the following benefits:
    1. A 12-month restriction period may better enable a provider with capacity to improve quickly to not be unduly delayed in its application.
    2. A 12-month restriction period may correspond well with annual planning and operational cycles. This alignment allows providers to plan resubmissions alongside other strategic activities, such as course development or recruitment.
28. We considered whether a 12-month resubmission restriction could enable us to achieve our aim while also being less intrusive than an 18-month resubmission restriction. We considered that a 12-month restriction may be more appropriate, particularly for a provider that can quickly address application deficiencies, and it avoids unnecessarily penalising a provider that is capable of making improvements within a shorter timeframe.
29. Our initial considerations, which have led us to propose of 18 months instead of 12 months, are:
    1. For a provider requiring significant organisational or operational changes, 18 months to implement the required adjustments would likely be appropriate. Governance restructuring, quality improvements, or securing additional funding often require a substantial period of time to complete effectively.
    2. An 18-month restriction acts as a stronger incentive than 12 months, and therefore decreases the risk of providers submitting applications that do not meet our requirements, whether applying for the first time or following any refusal.

Additional flexibility

30. We considered the option of whether additional flexibility could be introduced to address concerns that a 12-month restriction might not be enough in some cases. We considered the option of allowing a provider to resubmit earlier if it was able to demonstrate that all deficiencies from the refused registration application had been fully addressed. Or whether a restriction period could vary based on the type or category of registration application, reflecting the complexity or scale of changes required.
31. We have initially discounted these options because:
    1. Allowing a provider to apply for early resubmission would require the OfS to review an application to ascertain whether deficiencies had been addressed. This would create an additional administrative task, potentially delaying decisions on other applications, and would therefore not achieve our aim.
    2. There could be inconsistency in assessing whether deficiencies have been fully addressed.
    3. A provider may make minimal changes to address only the most apparent deficiencies and seek early resubmission without meaningfully improving their applications. This would not achieve our aim as the restriction aims to encourage comprehensive reflection and robust improvement.
    4. Introducing varying restriction periods is likely to add complexity to the process. Determining the appropriate restriction period for each type or category of application could lead to confusion for a provider and would not be an effective and efficient use of OfS resources.
32. We have also initially discounted the options of six- or nine-month resubmission restriction periods as we think they would not adequately achieve our aim. This is because our initial view is that they would not create a strong enough incentive for a provider to invest the necessary time and effort into preparing a high quality application when it first applies for registration.

Differentiated resubmission restriction periods

33. We considered proposing a differentiated resubmission restriction periods, whereby a refusal under section 3(5) of HERA because a provider’s application was incomplete would attract a six-month resubmission restriction, but a refusal due to not meeting one or more initial conditions of registration would attract a longer resubmission restriction. This is because changes required to rectify an incomplete application may be able to be completed more quickly by a provider than the changes needed to evidence compliance with initial conditions of registration (though this depends on how significant the issues identified are). We have provisionally discounted this option as we think a six-month restriction may not achieve the objective of incentivising providers to engage carefully with the OfS’s guidance and ensure that any submitted application fully complies with the OfS’s requirements for an application upon the first attempt.
34. However, our provisional view is that this proposal would not achieve the desired incentive for providers to submit well-prepared applications that meet all the OfS’s requirements on the first attempt. This is because they could use their first application to gauge the level of compliance required and how close they are to achieving this, address any weaknesses then resubmit immediately afterwards. This would place undue burden on OfS resource and be an inefficient process for providers. To avoid a provider needing to use the application process to gauge the level of compliance required, in addition to the detailed written guidance we already supply, we propose to standardly offer application support calls moving forward as outlined in Proposal 1.

New initial condition of registration

35. We considered imposing a new initial condition of registration as an alternative mechanism of achieving the resubmission restriction. This would introduce a new rule-based initial condition that would state that if a provider made an application within 18 months of receiving a final decision to refuse registration, it would not satisfy that initial condition.
36. We have provisionally discounted the option to impose a new initial condition of registration to achieve this restriction for the following reasons:
    1. Issuing a section 3(5) determination is in this case less resource intensive for both the OfS and the provider involved. If this restriction were imposed as a condition of registration, the provider’s compliance with this condition would need to be assessed. According to the current process, this would require the provider to submit a complete initial registration application, and invest considerable time and resources in doing so, before the OfS assessed compliance with the condition. If the OfS subsequently determined the condition was not met and refused the application, this investment would have been wasted.
    2. A section 3(5) determination allows the OfS to respond more quickly and flexibly to emerging issues or changes in the higher education landscape, for example if we wanted to vary this restriction in future. This is important for addressing specific regulatory needs without the lengthy process of establishing a new initial condition of registration.