Developing the regulatory toolkit

This is an edited version of a speech given by Susan Lapworth at the Independent HE annual conference 2021 on 12 October 2021.

Developing the regulatory toolkit

Last winter the OfS held an insight event about regulation. One of our speakers, Cathryn Ross, who has a long and successful career in regulation, made a powerful point that’s stuck with me.

She said that regulation cannot be static. It has to evolve. That’s because the interests of consumers and society change. And also, of course, the interests of higher education providers.

The higher education sector has lived through waves of change. A decade ago, we saw fundamental changes to the funding system and to the relationship between students and providers which crystalised in the need for a sector-wide regulator, so creating the OfS.

The last 18 months have seen rapid change, including extensive adoption of digital and blended approaches to learning. More recently still, legislation on free speech and skills is currently going through Parliament, there’s a new Secretary of State for Education, and an important spending review is just around the corner.

All of these changes will inevitably affect the interests of students and the incentives for providers.

Developing the regulatory toolkit

Cathryn Ross also argued that regulation has to evolve because the regulatory ‘toolkit’ changes – regulators learn what works and what doesn’t work. They develop new skills and capabilities.

The OfS’s regulatory toolkit is currently evolving in two key areas:

  • resetting our requirements for quality and standards
  • using our enforcement powers.

Quality and standards

Regulating in the real world

When we wrote the OfS’s regulatory framework we had a theoretical rather than practical understanding of what we needed it to do. For example, we knew we needed conditions of registration for quality, student protection, financial sustainability, good governance, and so on. 

Having used our quality conditions in the real world, we’ve recognised that they need to evolve if we’re to deliver our regulatory objectives. And, of course, in 2020 the coronavirus pandemic arrived and put the focus squarely on the quality of students’ academic experience in those difficult circumstances.

In other words, we could see parts of the regulatory toolkit that didn’t work as we’d originally intended, or that needed to be updated because the interests of students and society had changed.

This is why we’ve been consulting on changes to our approach to quality and standards and, in particular, how we set the requirements that providers all must meet.

Regulating to protect students

Our proposals are designed to ensure that students are protected from providers delivering courses below a minimum level of quality. We want to ensure that the choices available to students, in terms of the course and provider they choose, meet the OfS’s requirements for quality and outcomes. We think all students, including those from underrepresented groups and with protected characteristics, should have that regulatory protection regardless of what, where or how they study.

At the same time, we think we need to be clearer for providers about what our requirements are, the way we’re likely to use them in practice, and how we’ll intervene if we have concerns.

We take a principles-based approach to make sure that our requirements work for all providers, and all types of course. That means our conditions are future-proofed and will still work when, for example, there’s large scale flexible learning as a result of the government’s policy changes.

Ensuring a high quality academic experience for all students

One of the issues we can see raised in recent consultation responses, and that we expect to feature again when we consult in more detail on student outcomes, is a view that there’s a tension between on the one hand setting the same minimum requirements for all providers, and on the other, ensuring that students from underrepresented groups are able to enter and succeed in higher education.

We don’t agree there’s a tension here.

We take the view that all students, whatever their background and characteristics, should be confident that they’ll have a high quality academic experience and successful outcomes. Students from underrepresented groups shouldn’t be expected to accept lower quality, or weaker outcomes, than other students. So we don’t set lower minimum requirements for providers that typically recruit these types of students.

We can see that presents a challenge for higher education providers: if you’re recruiting students from underrepresented groups, you need to give those students a high quality course and support them to succeed. Many universities and colleges relish that challenge and deliver for their students.

But others aren’t doing that yet.

They may provide opportunities to access higher education for such students, but we also see low continuation rates and disappointing levels of progression to employment or further study. Our view is that you can’t have quality without equality; but nor can you have equality without a minimum level of quality for all students. The OfS’s regulatory attention needs to focus on providers that aren’t yet delivering both of these.

Pivoting from registration to enforcement

Before the pandemic, we’d spent much of the first phase of the OfS’s life registering providers. Some of that work was straightforward, some of it much more complex. We’ve made registration decisions for well over 400 providers. Using that part of our regulatory toolkit has taught us a lot about how to make registration decisions for a wide range of providers.

Many of those lessons are relevant once a provider is registered. But the toolkit is different after registration, and we’ve not used those tools very much so far. That’s what we plan to do now in the next phase of the OfS’s development.

Addressing non-compliance

That’s a shift of focus towards investigation and enforcement activity. There’s no point redesigning and consulting and implementing new conditions of registration for quality, or anything else, if we’re not going to address non-compliance where we see it.

The statutory framework gives us powers to investigate cases where we’re concerned about compliance, and to enforce compliance with our conditions where we find a breach.

  • We can require a provider to do something, or not do something, to fix a breach.
  • We can impose a monetary penalty.
  • We can suspend registration – for example, by switching off funding.
  • We can deregister a provider if that proves necessary.

That all sounds quite fierce.

But we need to understand which of these enforcement tools work best in which circumstances. And, perhaps more importantly, what we want to achieve in using them – so what’s the purpose of being fierce?

The simple answer is that we want to create incentives for all providers to comply with their conditions of registration. For example, regulators assume that imposing a monetary penalty on one provider will result in all the others taking steps to comply without the regulator needing to get involved. That’s an efficient way to secure compliance across a whole sector, particularly for a regulator like the OfS that deliberately doesn’t re-check compliance for every provider periodically. We don’t routinely re-run the registration process for providers every few years.

Prioritising enforcement action

How should we decide which potential breaches we should investigate and, if necessary, enforce?

There are over 400 registered providers, each of which is subject to at least 20 ongoing conditions of registration. It is not possible to go looking for evidence of non-compliance for each provider for each condition. That would generate more work than we could ever manage.  And it wouldn’t be consistent with a risk-based approach to regulation.

So we need to decide what sort of cases we want to focus on. We’re thinking about these issues just now as we head into the next phase of the OfS’s development. We want an approach that’s strategic and deliberate rather than reactive and ad hoc.

We think we could prioritise in lots of different ways.

  • We could prioritise on the basis of subject matter – so, for example, by focusing on quality cases. That would be consistent with all the things we’ve said during the consultations about the importance of quality. But what about free speech? The management and governance cases that come our way fairly regularly? Or possible breaches of consumer law, or fee limits?
  • We could prioritise on the basis of how many students seem to be affected by a breach – so more students affected might mean a greater chance of enforcement.
  • We could prioritise on the basis of the strength of the incentive that enforcement would create for other providers – for example, a substantial monetary penalty for a provider that didn’t submit its data on time to HESA would probably have a big effect on compliance across the sector.

Clearly some of these prioritisation approaches overlap. You could imagine a case where serious concerns about quality are affecting lots of students, and where a monetary penalty would incentivise other providers to think about whether they have similar issues that need fixing. There aren’t any right or wrong answers.

However we prioritise, we expect to use the part of our regulatory toolkit that leads to enforcement action more often. We think that’s in everybody’s interests. Visible, active regulation demonstrates that issues are taken seriously and that the regulator is prepared to act.

Why regulate the higher education sector?

Cathryn Ross also said that a sector only has a regulator in the first place if that sector is important to society.  I think that’s a useful point to hold on to as we debate how the OfS’s regulatory approach should evolve over time.


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Published 21 October 2021

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