Consumer law advice for the higher education sector

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The Competition & Markets Authority (the CMA) has published a consultation paper on draft consumer protection law advice for the UK higher education (HE) sector in relation to its dealings with undergraduates. There also appears to be a read-across for the further education (FE) sector.

The consultation follows on from a report published in March this year by the Office of Fair Trading, a predecessor body to the CMA, which found that although the HE sector was not “characterised by pervasive bad practices”, there was significant scope for clarifying HE providers’ responsibilities under consumer protection law.

The draft advice is designed to help HE providers to understand their legal responsibilities when dealing with consumers – i.e. students. There are three pieces of legislation, in particular, which are relevant in this context – the Consumer Protection from Unfair Trading Regulations 2008, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and the Unfair Terms in Consumer Contracts Regulations 1999. Very broadly, the 2008 Regulations prohibit traders from using unfair commercial practices towards consumers; the 2013 Regulations require the provision of certain pre-contract information for “distance contracts” (and provide consumers with cancellation rights), while the 1999 Regulations apply a test of fairness to standard terms in consumer contracts and render unenforceable a term which is “unfair”.

The focus of the draft guidance is on three specific areas of consumer protection:

  • the information available to students to enable them to choose the most appropriate course and HE provider
  • the terms and conditions used by some universities, including their accessibility, fairness and proportionality
  • the speed and effectiveness of complaints handling by some universities as well as an apparent lack of student knowledge about the process.

The key requirements identified in the consultation paper are:

Student research and application stage

To ensure legal compliance, HE providers should:

  • provide students with important information about the courses they offer, including as to fees and the structure of the course.  The information should be given before the student makes the decision about which course to apply for. The information must be accurate and not omit material information
  • ensure the information is accessible, e.g. via a website, prospectus or handbook and at open days
  • draw students’ attention to applicable rules and regulations, highlighting the most important terms.
Offer stage

HE providers should:

  • continue to provide important information to students to inform their choice of which offer(s) to accept. In particular, if any important information has changed from the prospectus or other promotional materials, this should be drawn to the student’s attention
  • provide the information for distance contracts (e.g. for offers and acceptances made through UCAS) prescribed by the 2013 Regulations and remind students of their statutory 14-day right to cancel.
Enrolment stage

HE providers should:

  • ensure that the information supplied at the offer stage is still accurate and advise students at the earliest opportunity if there have been any changes to the information about the course
  • consider whether there are additional requirements that apply where enrolment takes place on campus. The 2013 Regulations contain requirements relating to “on-premises” contracts which may be relevant in this context
  • draw students’ attention to terms and any other rules and regulations and make them accessible.
Fairness of terms

HE providers should:

  • ensure terms can be easily located and accessed (e.g. on a website)
  • ensure students are aware of terms and give them the opportunity to review them before they accept them
  • ensure terms are balanced. Terms that may be challenged as unfair include terms allowing the HE provider an unreasonably wide discretion in varying course content or increasing fees; terms limiting liability for non- or substandard performance; terms giving the HE a blanket right to receive assignments of intellectual property rights from students; and terms allowing the imposition of academic sanctions for non-payment of tuition fees. The presentation of the terms (e.g. font size), the clarity of language used and the extent to which onerous or unusual terms are highlighted will also be relevant to determinations of fairness.
Complaints handling

HE providers should:

  • ensure students are provided with information about the complaints process before they accept a place on a course
  • ensure that the complaints procedure can be easily located and accessed (e.g. on a website).

Consequences of non-compliance

The consultation document includes a reminder of what sanctions HE providers may face if they do not comply with the law. This could be enforcement action by Trading Standards, legal action by aggrieved students or the loss of a right to bring an action, for example to recover a debt. In particular, if a term of a consumer contract is found to be unfair, it cannot be enforced. Since 1 October 2014, following amendments to the 2008 Regulations, students have had the right to seek redress in respect of misleading actions and aggressive practices as well as redress through the courts for breach of contract.

What you should do and how we can help

The consultation will run until 18 December and the CMA hopes to finalised its advice early in 2015. Education providers may wish to comment on the proposals.

In preparation, education providers should review their procedures, websites and written materials and contractual terms to ensure compliance with consumer protection legislation. There have been a number of change to consumer laws this year – not least the 2013 Regulations, but also changes to the 2008 Regulations conferring a right of action on aggrieved consumers as well as developments in case law. With this in mind, and with the CMA about to finalise its guidance, now is a good time to undertake a compliance review. At Walker Morris we combine an understanding of the consumer protection legislation with demonstrable knowledge of the education sector. As such, we are uniquely positioned to help you ensure continued compliance.