Part 3: Proposals for changes to registration application requirements

39. Being financially viable and sustainable is an important requirement of the OfS regulatory framework.¹⁴ Condition D requires that:
• a provider is financially viable and sustainable
• has the necessary financial resources to provide and fully deliver the higher education courses as it has advertised and as it has contracted to deliver them
• has the necessary financial resources to continue to comply with all conditions of its registration.
40. ‘Financially viable’ means that there is no reason to suppose the provider is at material risk of insolvency within a period of three years from the date on which the judgement is made.
41. ‘Financially sustainable’ means the provider’s plans and projections must show that:
• it has sufficient financial resources to provide and fully deliver the higher education courses as it has advertised and contracted to deliver them
• it can continue to comply with all conditions of its registration for the period of five years from the date on which the judgement is made
• it is likely to be able to operate in accordance with these plans and projections over this period.
42. During registration the OfS carries out a comprehensive assessment of a provider’s financial performance and position, to decide whether the provider satisfies initial condition D. We receive evidence from each provider to inform this assessment, including:
    1. Full, audited financial statements (for up to three years, depending on how long the provider has been operating).
    2. Financial forecast tables, including the current year budget and four-year forecasts for financial and student number data, as well as underlying details of any growth or divestment plans.¹⁵
    3. Commentary to support the financial forecast tables to ensure that the OfS understands the provider’s context and the assumptions underlying its forecasts.
43. In some cases, we may request additional financial information from a provider during our assessment.
44. In light of the financial context of the English higher education sector, we think that it is only possible for us to conclude confidently that a provider will be financially viable for a period of three years and sustainable for a period of five years if:
• it can demonstrate that it can withstand adverse financial conditions
• its financial plans are sufficiently flexible and resilient for it to adapt in the face of such adversity without students being negatively impacted.
45. Some features of a provider’s model might indicate increased risk. For example, it might rely on recruiting international students for financial sustainability. But we think that the risks facing the sector as a whole mean that any provider applying to register needs to demonstrate this resilience, not just those with particular models. This is why we propose that this information would be a requirement for all providers to submit as part of a registration application and why it is appropriate that the OfS would be able to provisionally refuse registration based on an incomplete application if a provider did not submit it.
46. With respect to the particular scenarios that we are proposing, we have developed these alongside our analysis and modelling of the financial sustainability of the regulated higher education sector in England, which was published in November 2024.¹⁶ The latest information indicates that, overall, UK and non-UK student recruitment is significantly below the sector’s expectations and, for some providers, in line with the more pessimistic scenarios modelled in our May report.¹⁷ Autumn 2024 recruitment outcomes have varied significantly for different types of higher education provider, and for providers within similar groups. Based on our latest modelling, we estimate UK undergraduate entrants to be, in aggregate, 10 per cent lower than the sector’s forecasts for 2024-25, and non-UK entrants to be 23 per cent lower than those forecasts. In response to these pressures, providers are changing their student recruitment behaviour and students’ choices are also changing. It is therefore appropriate for all higher education providers to be thinking about the impact this could have and how they will remain financially sustainable if they have fewer new students than they had forecast or planned.
47. The proposed scenario for a provider not yet delivering higher education has been developed based on our experience of the past few years, where we have seen that many providers new to higher education, or in the early stages of operation, significantly underrecruit in the years immediately following registration compared with their forecasts. Of a sample analysis of providers that applied for registration in 2021 or later, and that had not previously delivered higher education when they applied for registration, we found that:
1. Around a third of providers deferred their initial planned recruitment cycles and did not immediately recruit students once registered, which resulted in a longer period of zero growth than had been forecast, as they prepared to deliver higher education.
2. Once student recruitment did commence, in providers’ first full cycle of student recruitment after registration, more than half substantially underrecruited against their original forecasts (by 80 per cent or more).
48. We think that our proposed scenario planning provides an opportunity for realistic stress testing of forecast financial plans. For a new provider, the early stage of operations is often the most vulnerable. We think that the proposed scenario planning would provide a clear indication of how a provider’s financial model holds up under realistic adverse conditions and provides a rigorous test of whether a provider can maintain financial viability and sustainability, as required by initial condition D.
49. It is clear that the financial context for the sector is becoming even more challenging. Student recruitment is more challenging, particularly international student recruitment, and there is a pattern of recruitment forecasts that are too ambitious across the sector. We therefore think it is appropriate to consider stress testing forecasts as part of initial condition D during our registration assessment.
50. We think that the proposed scenarios are a realistic reflection of the financial challenge a provider may encounter in the short-to-medium term and should form a part of our assessment of whether a provider applying for OfS registration meets the requirements of initial condition D, that is, that the provider is financially viable and sustainable.

14 See condition D at paragraphs 397 to 423 of Regulatory framework for higher education in England.

15 See ‘Template for financial and student numbers tables’ at Regulatory advice 3: Registration of English higher education providers with the OfS.

16 See Financial sustainability of higher education providers in England: November 2024 update.

17 See Financial sustainability of higher education providers in England: 2024.

39. In addition to the information already required as part of initial condition D, we are proposing that a provider submits an additional financial table and associated commentary and mitigations which models different scenarios (for example, less favourable levels of student recruitment) and the associated impact on the provider’s financial viability and sustainability. We would use this information to inform our assessment of whether the provider meets the requirements of initial condition D.¹⁸ This proposal focuses on requiring a provider to analyse its existing financial data in new ways rather than providing entirely new information.
40. The proposed scenarios specified below would be incorporated into the current financial tables template¹⁹ with additional fields for commentary. Completing these scenarios would be a requirement of the proposed section 3(5) Notice set out in Proposal 1 and attached at Annex A of Part 3 of this consultation. If a provider did not complete these proposed scenarios, the OfS could provisionally refuse the provider registration on the basis that its application did not meet the OfS’s requirements (see Proposal 1 paragraph 31).
41. We propose that a provider applying for OfS registration that is already delivering higher education should include the scenarios set out in Table 2 below.

Table 2: Proposed scenario planning information that a provider already delivering higher education would be required to submit as part of a registration application

54. For a provider not yet delivering higher education, we propose that the provider would need to include the scenario set out in Table 3 below:

Table 3: Proposed scenario planning information that a provider not yet delivering higher education would be required to submit as part of a registration application

55. We propose that the scenario information proposed above would be incorporated within the current financial tables template,²⁰ ensuring that the analysis is integrated into the existing financial data submission process, which ensures consistency in how scenarios are analysed and presented across all registration applications.
56. We propose that a financial tables template would be appended to the section 3(5) Notice set out in Annex A of Part 3 of this consultation. This would make it a formal requirement for a provider to complete this analysis as part of its application for registration (and a provider could have its application refused if this information were not submitted).
57. Due to the challenging higher education student recruitment environment, as outlined above, our proposal is that the requirements for financial modelling, as part of initial condition D, may be amended from time to time to reflect emerging sector issues and our analysis of financial risk in the sector.
58. We may, at a later date, set out further financial modelling scenarios with different parameters for a provider with a business model that is not predominantly driven by higher education student income. We may do this through updated guidance, or an updated section 3(5) Notice.
59. The proposal would apply to any unregistered provider making an application to register with the OfS after the publication of our decisions following this consultation.
60. We propose that these requirements would not routinely apply to applications from a registered provider to change its category of registration. For applications to change category of registration, we propose that we would issue a bespoke section 3(5) Notice setting out the information we required that provider to submit according to its circumstances. In general, we require a provider that is already registered with the OfS to submit less information for this type of registration application, because we already hold regulatory information about the provider through routine monitoring. We may however request this information as part of a bespoke section 3(5) Notice
61. In developing our proposed approach, we carefully considered the potential impact on providers.
62. We considered whether this proposal may lead more often to a provider failing to satisfy initial condition D and therefore being refused registration, if it could not show how it could withstand the modelling scenarios set out and remain viable and sustainable. As we have set out, we are not proposing to change the requirements of initial condition D. If a provider that applies for registration has sufficient resources to be financially sustainable for a period of five years and deliver the higher education it has advertised, we would be likely to find that it met initial condition D.
63. In setting out the scenarios according to the parameters we have proposed, a provider could set out the mitigations it would put in place to ensure it remained viable and sustainable in these scenarios, or to manage the impact on students. This might mean for example:
• not starting enrolment onto a course that was going to be unsustainable in such a scenario
• considering how the course could still be delivered with an alternative staffing model or other cost savings measures
• securing additional investment or income from other sources to compensate for the loss of student fee-related income.
64. Further, if the provider could provide evidence that the scenarios the OfS had applied were unrealistic in the context of its planned higher education strategy, and that there was high certainty of achieving its forecasts, we propose that the OfS would also take this into account.
65. If, under our proposals, a provider could not show how it would remain viable and sustainable or deliver the higher education courses it had advertised, even taking into account any mitigations it would deploy, and any other contextual information relevant to the assessment, the OfS may conclude that the provider did not meet one or more of the existing requirements of initial condition D. If the OfS made a provisional decision to refuse registration because a provider did not meet initial condition D, the provider would be given a statutory period of 28 days to submit any representations about the provisional decision, including providing additional information not previously considered by the OfS.
66. Our initial view is that a provider in this situation would have been likely to have been refused registration under the existing information submission requirements for initial condition D even if it had not provided scenario planning, on the basis of the provider’s underlying financial position and its plans to deliver higher education. However, the OfS may be able to reach its judgement more quickly and efficiently (and avoid lots of back-and-forth clarifications with the provider) where scenario planning has been provided. The scenario planning would also help ensure that the OfS’s assessment is as robust as possible.
67. We also considered the additional burden of preparing this financial information, particularly requiring predetermined modelling criteria instead of allowing a provider to use its own. We recognise that this proposal may place demands on a provider's finance staff or may mean that it needs to procure external expertise for financial modelling. And, if a provider did not submit this information as part of its initial registration application, the provider may have its application refused.
68. However, our initial view is that the current and medium-term financial challenges in the higher education sector justify these burdens. Ensuring robust financial planning is essential not only for providers but also for protecting students' interests and this should include stress testing of assumptions.
69. This proposal aims to encourage a provider to engage fully with the financial risks and challenges prevalent in the sector and to plan effectively for maintaining its financial viability and sustainability in the context of these risks and challenges. While this process may require additional effort, our initial view is that it ultimately benefits providers by encouraging them to proactively address potential vulnerabilities in their financial models. Where a provider does need to spend additional resources on undertaking the proposed financial modelling, we think that this would be a necessary investment to support realistic planning.
70. Ultimately this proposal aims to protect students. By requiring providers to demonstrate financial viability and sustainability under adverse but realistic conditions, the OfS can reduce the risk of financial instability that could disrupt students' education. Testing scenarios of zero growth and significant shortfalls in student enrolments is critical to assessing whether a provider can withstand financial challenges and deliver on its commitments to students.
71. In light of the increasing diversity of providers and the risks posed by market competition and economic fluctuations, we think that these scenarios represent a realistic and necessary measure of resilience. By ensuring that providers are equipped to handle financial challenges, this proposal contributes to a more stable and reliable higher education sector, ultimately safeguarding the educational experience and opportunities available to students.

18 See condition D at paragraphs 397 to 423 of Regulatory framework for higher education in England.

19 See ‘Template for financial and student numbers tables’ at Regulatory advice 3: Registration of English higher education providers with the OfS.

20 See ’Template for financial and student numbers tables’ at Regulatory advice 3: Registration of English higher education providers with the OfS.

72. In considering this proposal we considered several alternative approaches which we have set out in Annex C of Part 3 of this consultation. These options considered were:
    1. continuing the current arrangements
    2. proposing more flexible scenario planning.

We are seeking views in Part 3 of this consultation on the principle of requiring additional scenario planning and the scenario-planning parameters.

We want to hear respondents’ views on the balance we are seeking to achieve in requiring additional financial information due to the increased risk posed by the operating environment for a provider’s financial viability and sustainability and the increased regulatory burden this may create for a provider seeking OfS registration.

Question 2a (i): Do you agree or disagree with the proposal to require a provider to submit additional scenario planning, commentary and mitigation plans as part of the OfS registration application? Please give reasons for your answer.

Question 2a (ii): Do you agree or disagree that the proposed financial scenario parameters for a provider already delivering higher education provide a realistic challenge to a provider’s financial forecasts? Please give reasons for your answer.

Question 2a (iii): Do you agree or disagree that the proposed financial scenario parameters for a provider not yet delivering higher education provide a realistic challenge to a provider’s financial forecasts? Please give reasons for your answer.

Question 2a (iv): Do you support any of the alternative options we have set out in Part 3, Annex C, Proposal 2a of this consultation, or do you have any other proposals? If so, please explain and provide reasons for your view.

73. The current published timeline for registration, based on a positive assessment, is 46 weeks from the point we confirm an application is complete. The period of nearly one year means that it is common for a provider’s financial position to change significantly during the course of the OfS’s assessment. By requiring updated financial and student numbers tables, the OfS can assess a provider's financial health at (or very close to) the point of registration and whether it has changed since the initial registration application. This enables the OfS to determine whether the provider meets the requirements of initial condition D at the point at which it is registered.
74. The financial situation of a provider can change significantly between its initial application and our registration decision. Factors such as unexpected costs, changes in funding, changing student recruitment patterns, changes in partnerships or shifts in the economic environment can affect a provider's financial position and result in material changes even in a short time. Relying on static data from a provider’s initial registration application may therefore not reflect a provider’s circumstances at the time that the registration decision is made. Updated financial and student numbers information and commentary allow the OfS to understand any such changes and ensure that the provider still demonstrates financial viability and sustainability under current conditions.
75. We are increasingly finding that we need to request additional financial information from a provider during most registration assessments. We will usually do this if there is a significant change in the provider’s position or where previous financial information submitted as part of the application is no longer up to date. This is more likely if a registration assessment takes longer than one year, which may happen where the assessment involves complex judgements, or the OfS needs to seek further information to establish whether a provider satisfies conditions of registration. Where we request updated information, it is usually in the form of updated financial and student numbers tables and associated commentary, along with any additional years of audited financial statements that are available.
76. We think that this proposal will streamline this interaction, avoid the need for frequent updating of a provider’s financial position through the registration assessment and avoid delays that are created when a provider is not expecting a request for updated information. Making this requirement visible and transparent to a provider ensures it can plan and prepare to avoid delays in the process.

77. We propose to require a provider to submit an updated version of its financial and student numbers table and commentary towards the end of the registration assessment.
78. We propose that submitting updated financial and student numbers tables during the registration assessment period would be a requirement imposed via the proposed section 3(5) Notice set out in Proposal 1 above. The financial and student numbers table template would be appended to the section 3(5) Notice (Annex A of Part 3 of this consultation) which would make these a formal requirement for a provider to submit as part of its application for registration. This would mean that we could provisionally refuse registration if a provider did not submit this information.
79. Table 4 below sets out how this proposal would operate in practice and how it differs from the current finance and student number data requirements:

Table 4: Comparison of current and proposed submission requirements for financial and student numbers tables

80. The proposal would apply to any unregistered provider making an application to register with the OfS after we publish our decisions following this consultation.
81. We propose that these requirements would not routinely apply to applications from a registered provider to change its category of registration. For applications to change category of registration, we propose that we would issue a bespoke section 3(5) Notice setting out the information we required the provider to submit according to its circumstances. In general, we require a provider that is already registered with the OfS to submit less information for these types of registration application, because we already hold regulatory information about that provider through routine monitoring. We may however request this information as part of a bespoke section 3(5) Notice.
82. We have considered the impact of this proposal, in particular the mechanism through which the requirement would be imposed. Under the proposed section 3(5) Notice set out at Proposal 1, the OfS could refuse a registration application if a provider did not submit the information set out in the notice. This means that if a provider failed to submit an updated financial and student numbers table within the specified time (we propose within 60 days of the OfS notifying the provider that the updated submission is required), a provider’s application to register may be refused.
83. We think that the rapidly changing higher education landscape, combined with the gravity of the financial challenges currently facing the sector and anticipated in the medium term, justify robust measures to ensure the viability and sustainability of each provider. This proposal introduces additional requirements for a provider seeking OfS registration. But we think that the likely benefit of this proposal outweighs the burden because it would help ensure that regulatory decisions are based on the most accurate and up-to-date information. This would reduce the risks associated with registering a provider where its financial or operational conditions may have materially deteriorated since its initial application, as we have seen in some cases.

84. We have considered the principle of proportionality and the need to adopt the least intrusive means to achieve our aim of ensuring accurate, reliable, and up-to-date financial and student data from each provider applying for registration. Several alternatives were assessed, and these are set out in Annex C of Part 3 of this consultation. The alternatives considered were:
1. continuing the current arrangements
2. requesting only confirmation of any changes
3. requiring financial information to be submitted only at the end of the registration process.

Question 2b (i): Do you agree or disagree with the proposal to require a provider, during the registration process, to submit updated financial and student number tables and commentary? Please give reasons for your answer.

Question 2b (ii): Do you support any of the alternative options we have outlined in Part 3, Annex C, Proposal 2b, or do you have any other proposals? If so, please explain and provide reasons for your view.

85. As explained above, the current published timeline for registration, based on a positive assessment, is 46 weeks from the point we confirm an application is complete. During the registration process it is not uncommon for matters to change at a provider while our assessment is underway. The proposal means that we can assess a provider's current financial position and how it has evolved since its initial registration application.
86. Because audited financial statements are prepared and reviewed by independent auditors, we can place assurance on the figures in the statements being accurate, because the independent auditor has previously satisfied themselves of this. This means that we can place assurance on audited financial statements as containing accurate information for us to use to assess whether a provider meets the requirements of initial condition D.
87. Financial statements offer a detailed view of a provider's income, expenses, assets, liabilities, and cash flow. By reviewing audited financial statements for the most recent financial year, we can identify any emerging risks, such as declining revenue, increasing debt, or cash flow issues, that could threaten the provider's financial viability. It will also allow us to assess whether the requirements of initial condition D have been met.

88. Currently a provider is required to submit audited financial statements, as set out in initial condition D.
89. We propose that a provider would be required to submit audited financial statements for any financial years that are completed:
    1. After the provider’s initial submission of its registration application; and
    2. Before the OfS makes a final decision about the provider’s registration application.
90. We propose to require a provider to submit audited financial statements no later than nine months after the end of the relevant financial year for any financial years that are completed after the provider submitted its application for registration.
91. Our initial view is that this timeframe balances practicality, regulatory need, and alignment with usual practice. Many, though not all, providers are required to produce audited financial statements as part of their statutory obligations. Where entities are required to file audited statements with Companies House, the deadline for filing is within nine months of the end of the financial year. The Charity Commission for England and Wales, which regulates many higher education providers, also requires submission of audited financial statements within a similar timeframe (ten months).
92. We think that aligning the proposed submission timeframe with existing reporting requirements of other bodies helps minimise the administrative burden that this proposal may have on a provider when it is not yet registered, and therefore not yet receiving any of the benefits of registration. Once a provider is registered and can access the benefits of registration, we require it to submit audited financial statements within a shorter timeframe; within five months of its financial year end as part of the Annual Financial Return data return. This shorter timeframe is necessary for the OfS to monitor effectively the financial health of individual providers and the sector as a whole.
93. This proposal would apply to any new application for registration submitted after publication of our decisions following this consultation.
94. We propose that this requirement would not routinely apply to an application from a registered provider to change its category of registration. For applications to change category of registration, we propose that we would issue a bespoke section 3(5) Notice setting out the information we required the provider to submit according to its circumstances. In general, we require a provider that is already registered with the OfS to submit less information for these types of registration application, because we already hold regulatory information about that provider through routine monitoring. We may however request this information as part of a bespoke section 3(5) Notice where we deem this necessary according to the circumstances of the provider.
95. We have considered the impact of this proposal, in particular the mechanism through which the requirement would be imposed. Under the proposed section 3(5) Notice set out at Proposal 1, the OfS could refuse a registration application if a provider did not submit the information set out in the notice. This means that if a provider failed to submit audited financial statements for any financial years completed after a provider’s initial submission of its registration application within nine months of the end of the relevant financial year, a provider’s application to register may be refused.
96. We acknowledge that this proposal may increase regulatory burden for a provider seeking OfS registration. Depending on the timing of a provider’s registration application, it may not impose any additional burden at all, if the OfS completes its assessment and makes a decision before the provider’s next year of financial statements become due. However, for some providers it will impose additional burden and it may have a greater impact on any provider that does not otherwise need to prepare audited financial statements for any relevant year(s) (for example, a provider that does not need to submit audited accounts to Companies House due to its size or legal form). A provider may need to allocate additional time, resource and expertise to liaising with and paying auditors, compiling financial data and ensuring that accounts are audited within the given timeframe.
97. Our initial view is that the benefit of this proposal outweighs the burden this requirement may place on a provider. In addition to the detailed, independently verified and up-to-date financial information this provides for the purposes of our assessment, we also think this is the case because a provider will be required to submit audited accounts as part of its annual financial return²¹ when it is registered. So, we propose that if a provider meets this requirement as part of its registration application this will help it prepare to comply with ongoing regulatory requirements if it is registered.

21 See paragraphs 397 to 423 of the OfS regulatory framework at Condition D: Financial viability and sustainability.

98. In developing this proposal, we have considered whether our proposal is proportionate, and whether there are other options that could achieve our aim with less The alternative options we considered are listed below and set out in Annex C of Part 3 of this consultation:
    1. continuing the current arrangements
    2. relying on unaudited financial data
    3. proposing a longer deadline.

Question 2c (i): Do you agree or disagree with the proposal to require a provider, during the registration process, to submit audited financial statements for any financial years that are completed after the provider’s initial submission of its registration application, and before the OfS makes a final decision about the provider’s registration? Please give reasons for your answer.

Question 2c (ii): Do you support any of the alternative options we have outlined in Part 3, Annex C, Proposal 2c, or do you have any other proposals? If so, please explain and provide reasons for your view.

We propose to require a provider to submit a diagram showing its corporate structure and ownership as part of its registration application. The diagram should:

• include all legal and beneficial owners of the provider (direct and indirect), including the ultimate beneficial owner, whether individuals or corporate entities
• include any trusts with ownership interests (direct or indirect) in the provider together with an explanation of what ownership interests the trust has, and the nature of the trust, including whether it is owned by any other legal or natural person and who its beneficiaries are
• illustrate the provider’s position alongside its parent and subsidiary undertakings (where it has these), as defined by the Companies Act 2006²²
• include other entities that fall under a common parent undertaking to the provider applying to be registered
• illustrate the relationship between all individuals and entities shown.

22 See Section 1162 and Schedule 7 of Companies Act 2006.

99. Currently, when a provider applies for registration, it submits information about its structure on the ‘corporate information’ section of the application form. We ask for this information to understand the provider’s corporate, control and ownership structures. This includes the following:
    1. The provider’s legal form, company number (if applicable) and charity number (if applicable).
    2. A list of the provider’s relationships with linked organisations (this includes parent companies, subsidiary companies and other linked organisations), including the names and company numbers of any linked organisation.
100. However, we have found that where a provider’s corporate structure or ownership is complex, the information we currently request does not provide everything we need to understand its corporate structure and ownership.
101. In our experience, the types of providers seeking registration with the OfS now often have complex corporate structures that can include partial or full ownership by other entities and multiple parent or subsidiary companies. Understanding these structures and the relationships between each entity can be time-consuming. If we do not have a clear view of a provider’s corporate structure and ownership when conducting our assessment, this can lead to:
• the assessment being inaccurate
• not properly taking account of risks (for example, risks relating to a provider’s financial position) and being significantly delayed
• prolonging the time we take to reach a decision while we request additional information and clarification from the provider.
102. We propose that the requirement for a provider to submit a diagram showing its corporate structure and ownership would address the challenges outlined above in the following ways:
     1. The diagram would provide the OfS with a clearer and more comprehensive starting point to understand a provider’s context than the existing required list of linked organisations alone. It would support a quicker understanding of a provider’s wider ownership, control and governance arrangements, and financial interdependencies, enabling a more efficient overall assessment.
     2. Providing a diagram at the point of application would reduce the need to seek additional information once an application had been submitted, therefore reducing delays to the assessment that could be avoided.

103. The proposed requirement would be set out in the section 3(5) Notice which would impose requirements for all registration applications, as set out in Proposal 1 and Annex A of Part 3 of this consultation. This would mean that the submission of this diagram is a mandatory component of a registration application and that if a provider does not submit it, the OfS may refuse its registration application.
104. This new requirement is intended to provide greater transparency about the ownership and governance of a provider and quickly provide the OfS with a holistic understanding of the overall corporate structure in which it sits, facilitating a more efficient assessment overall. We think that this requirement will be easy for providers to comply with and that most providers are likely to already have this type of diagram.
105. We propose that the diagram will be used as contextual information to help the OfS assess requirements that include but are not limited to:
     1. Initial condition D – the OfS may use the diagram to support its understanding of the provider’s financial position, particularly in cases where a provider’s financial viability and sustainability relies on its parent undertaking or any other entities in its corporate structure.
     2. Proposed initial condition E7 – the OfS may use the diagram to verify the provider’s owners (in conjunction with other information submitted by the provider as part of its registration application) and check that a provider has correctly disclosed all relevant individuals so that the OfS can assess whether they are fit and proper persons.
     3. Eligibility – the OfS may use the diagram in addition to other evidence submitted by the provider or publicly available information to determine whether the provider meets criterion 3 of the eligibility criteria relating to whether the provider is ‘an institution’. In particular, the OfS is likely to use the diagram to understand whether a provider’s parent or subsidiary undertaking is a registered provider, whether the provider is controlled by another registered provider, or provider seeking registration, and whether there is overlapping ownership with another registered provider.
106. We have set out several proposed requirements that the diagram should include. This is to ensure that the diagram achieves the objective of providing clear and comprehensive information about the provider’s corporate structure and ownership. Table 5 below explains why we think that each of these elements would be required.

Table 5: Proposed requirements of corporate structure and ownership diagram and why these are required

107. We think that most providers are likely to have an existing diagram that illustrates corporate structure and ownership. If a provider did not have a suitable document and therefore needed to create one, we do not think that this would be a difficult or time-consuming task for the vast majority of providers. For a provider that has a very simple corporate structures, for example a single legal entity, this requirement would be very straightforward.
108. We have proposed to define parent and subsidiary undertakings according to the definitions set out in section 1162 and schedule 7 of the Companies Act 2006.²³ Our initial view is that linking our definition to the provisions of the Companies Act is preferable to creating bespoke definitions to describe group structures and parents and subsidiaries within those structures for the purposes of OfS regulation. Linking to the Companies Act definition aligns our requirements with definitions that already apply to companies that are registered in the UK, which is the case for the majority of providers now seeking registration.
109. We propose that this requirement would apply to any new application for registration made after the publication of our decisions following this consultation.
110. We propose that this requirement would not routinely apply to applications from a registered provider to change its category of registration. For applications to change category of registration, we propose that we would issue a bespoke section 3(5) Notice setting out the information we required the provider to submit according to its circumstances. In general, we require a provider that is already registered with the OfS to submit less information for this type of registration application, because we already hold regulatory information about the provider through routine monitoring. We may however request this information as part of a bespoke section 3(5) Notice.

23 See Section 1162 and Schedule 7 of Companies Act 2006.

111. In considering the proposal to require a corporate structure diagram as part of the registration process, we have considered whether other options would achieve the aim we set out. The options we considered are listed below and set out in Annex C of Part 3 of this consultation document:
     1. continuing the current arrangements.

Question 2d(I): Do you agree or disagree with the proposal to require a provider, as part of its registration application, to submit a diagram showing its corporate structure and ownership as described in this proposal? Please provide reasons for your view.

Question 2d(II): Do you support the alternative option outlined in Part 3, Annex C, Proposal 2d of this consultation, or do you have any other proposals? If so, please explain and provide reasons for your view.