Managing immigration compliance risk through large deposits is immoral and probably unlawful

I don’t know if it’s true. But if it is, it’s the pointy end of a wider problem that is, in policy terms, a fairly straightforward consumer protection problem that universities have made complicated and regulators have been slow to address.

PIE News has been investigating the real cost of non-refundable deposits – it works something like this. An international student applies to a UK university. Before the university will assign them a Confirmation of Acceptance for Studies – the CAS document they need to apply for a visa – they’re required to pay a deposit, often running to several thousand pounds, which the university’s terms declare non-refundable in certain circumstances.

The student applies for a visa. UKVI refuses it. The university points to its terms, says the refusal was on “credibility grounds,” and declines to return the money.

On Reddit, one student describes paying £8,000 to a postgraduate programme, having their visa refused because UKVI was not satisfied they were a genuine student – no allegation of fraud or false documents – and then watching the university apply a clause designed for fraudulent applicants while simultaneously offering a deferred place for next year.

They note the obvious – a university that considers you non-genuine doesn’t offer you a spot next cycle. The policies, they wrote, “contradict each other.”

The deferral offer instead of a refund keeps the university’s hold on the money, requires the student to go through another visa application they may fail again – possibly against a worsening refusal-rate backdrop – and does nothing about the immediate financial harm.

For a student who has taken a loan or drawn on family savings, “try again next year” isn’t a resolution, it’s a delay tactic dressed up as generosity.

PIE News has canvassed agents reporting between 50 and 100 live disputed cases from the January intake alone. On r/UniUK, students describe months of silence before refunds arrive – nearly four months in one case involving £8,000 – and other universities pushing deferral over cash as a first and only offer.

Charge of the fee brigade

Almost all UK universities – 96 per cent, according to a 2023 Universities UK International survey – require deposits from at least some international students before a CAS is assigned.

Across 148 providers we’ve looked at, amounts cluster in a lower band of £1,000 to £2,500, a middle band of £3,000 to £5,500 that dominates the sector, and a high end where some require the full first-year (in many cases the only year) fee upfront.

Almost every published policy defaults to “non-refundable” and carves out exceptions. Three are near-universal – the 14-day cooling-off right under the Consumer Contracts Regulations 2013, a genuine visa refusal that isn’t the student’s fault, and fraud or deception. The problem sits in the middle exception.

A version of the following wording has spread across the sector – a visa refusal is refundable, provided it wasn’t refused on “grounds of deception, fraud or lack of credibility on your behalf.” The University of Hull’s policy is one example.

That “lack of credibility” phrase is doing a hell of a lot of work. A credibility refusal isn’t fraud, or false documents. It’s a UKVI officer deciding, in a short interview, that they aren’t satisfied the student’s intentions are genuine. No dishonesty is alleged, and nothing has been misrepresented. And yet the refund clause treats this outcome identically to document forgery.

Unlike a normal consumer situation where you could shop around and decline unfavourable terms, a student who wants to apply for a visa has no practical alternative. Payment of the deposit is the gate to the CAS process. You pay and accept the terms or you can’t proceed at all. The CMA guidance requires that non-refundable circumstances are “clear and narrow” with no wide discretion – it’s harder to argue for clarity and narrowness when the clause is the price of entry.

A credibility gap

As such, there’s a major problem with treating credibility refusals as evidence of student fault. The sector’s own research shows they often aren’t.

Universities UK compiled research into UKVI credibility decisions and shared it with The Times in April 2026.

• In one case, a student was refused on the basis that they hadn’t conducted credible research into other study options – because UKVI disputed their reasoning for ruling out Canada, challenging their claim about the weather and providing its own account of mild conditions in certain Canadian provinces.
• In another, a student was refused for citing the wrong founding year of their chosen university. The university subsequently confirmed the applicant had cited the correct year and the UKVI caseworker was mistaken.
• A third student was refused on the grounds that their chosen university wasn’t in Norfolk. It is. The UKVI caseworker appears to have confused the county with its capital.
• In a fourth case, a PhD applicant was refused for giving “vague and generic” answers about their taught modules. The course was a fully research-based PhD – there were no taught modules.

Crucially, neither students nor universities can challenge these decisions. There’s no effective administrative review mechanism that applies to credibility interview refusals. The determination is final.

That means that universities are potentially retaining thousands of pounds on the grounds that a UKVI credibility refusal represents the student’s fault – in a framework their own sector body designed as a risk-management tool – while simultaneously compiling evidence that UKVI credibility decisions are sometimes based on factual errors and are entirely unreviewable.

And yet the deposit policies these same universities operate treat the UKVI’s word as dispositive of the student’s guilt.

The CMA guidance says retention on cancellation is more defensible where “the consumer is at fault.” It’s genuinely difficult to argue a student is at fault where the credibility decision against them rested on a UKVI caseworker not knowing that Norfolk is a county, or that a research PhD has no taught modules.

The OfS prohibited behaviours list‘s “disproportionately high sum as penalty” provision doesn’t have a carve-out for cases where the trigger was an unreviewable official error. And its forthcoming good-faith principle looks considerably harder to satisfy if you’re retaining a student’s money on the basis of a finding you know may be wrong and have actively lobbied against.

Passing the buck

The engine driving all of this is the Basic Compliance Assessment, which from June 2026 will see universities rated amber if their visa refusal rate reaches 4 per cent, and red – meaning they can’t enrol foreign students – if it hits 5 per cent. Refusal rates for Pakistani applicants have now passed 40 per cent this year, compared to 6 per cent in Q1 2025.

Home Office data shows a more than 600 per cent increase between October 2025 and March 2026. Bangladesh sits at around 22 per cent. For universities with heavy recruitment from these markets, the threat to their sponsor licence is immediate and the BCA system gives them almost no time to respond – universities are “flying blind,” unable to get timely data from UKVI on their own visa performance.

That context is real, but managing the BCA risk by taking large non-refundable deposits from applicants in high-refusal markets and keeping them when UKVI refuses the visa isn’t managing the risk. It’s transferring it – specifically, transferring it to individual students from Pakistan, Bangladesh, Nigeria and Sri Lanka, on the basis of UKVI decisions their own sector body is documenting as sometimes wrong.

Universities UK International’s 2023 guidance on diversification explicitly recommends pre-CAS interviews and proof-of-maintenance verification as the compliance screening tools of choice. Both target the risk at the individual level. Neither requires loading financial exposure onto students by passport.

Passport to penalty

Universities with the highest country-differentiated deposits aren’t simply charging more across the board. One charges £8,000 for students from Bangladesh, Iran, Pakistan, Syria and Yemen while standard applicants pay £4,000. Another charges the full first-year fee for students from Pakistan, Bangladesh and three Indian states.

It’s increasingly typical to see universities move to £5,000 for students from Bangladesh, Ghana, Myanmar, Nigeria, Sri Lanka and Pakistan against a standard £1,500.

The cohorts facing the highest deposits are precisely the cohorts facing the highest refusal rates, the credibility carve-out that blocks their refund, and – as UUKi’s own research shows – the most questionable UKVI decision-making.

And under the Equality Act 2010, section 142, a contractual term is unenforceable insofar as it provides for treatment prohibited under the Act. Charging materially higher sums by national origin is a form of indirect discrimination. Objective justification requires demonstrating both a legitimate aim and the least discriminatory means of achieving it. Individual pre-CAS interviews and maintenance verification – recommended by UUKi itself – achieve the same screening without keying financial exposure to a passport.

Unfair’s fair

The Competition and Markets Authority’s guidance on unfair terms is unambiguous about prepayments. A term making any substantial prepayment entirely non-refundable regardless of circumstances or actual costs is more likely to be unfair. A genuine deposit that can legitimately be retained “will not normally be more than a small percentage of the price.” A larger prepayment is “necessarily more likely to give rise to fairness issues, for instance being seen as a disguised penalty.”

Postgraduate taught tuition in this dataset typically runs to £15,000 to £20,000 a year. An £8,000 deposit is up to 50 per cent. The word “deposit” does reassuring consumer-psychology work that the sums don’t support.

Even where a student is at fault, a university can retain only what’s reasonably needed to cover its unavoidable net costs or lost profit after mitigation – including re-filling the place. A place refused on credibility grounds before term starts can almost certainly be re-offered. Which means several thousand pounds in retained deposits is very unlikely to represent actual net loss. And signing the terms doesn’t fix any of this – an unfair term isn’t enforceable regardless of the student’s agreement.

Conditions apply

OfS’s initial condition C5 contains a prohibited behaviours list that includes – in part a, provisions iii to v and vii – terms that create a disparity between provider and student rights by retaining the student’s money where the student withdraws without providing equivalent compensation when the provider cancels, terms that require a disproportionately high sum as a penalty for services not yet supplied, and terms that allow a provider to retain money for services not yet supplied where the provider itself cancels.

When a respondent to the C5 consultation raised non-repayment of deposits for visa-sponsored students specifically, the OfS responded that the relevant provisions “quite closely reflect existing legal requirements with which traders in any sector are required to comply.”

C5 applies to new providers. Proposed C6 extends explicitly to third parties acting on the provider’s behalf. That means agents who fail to explain to students that a credibility refusal forfeits their deposit are the provider’s problem, not a convenient deflection. Universities recruiting heavily from Pakistan and Bangladesh through agent networks – agents who apparently didn’t make the financial risk clear – would own that failure under C6 in a way they currently don’t.

One of the C6 principles requires providers to proactively identify and plan for risks that could affect their services, and act early when those risks materialise. Home Office visa refusal data by market is published quarterly and has been deteriorating sharply for two years.

A university watching refusal rates climb above 20, 30, then 40 per cent – while continuing to issue CAS and take non-refundable deposits from applicants from those markets – has a significant problem with that principle. The question C6 invites is a simple one – at what point did the university know enough to make taking a large non-refundable deposit commercially indefensible?

Universities UK’s own research on spurious UKVI decisions sharpens the question. If the sector body knows that credibility refusals are sometimes wrong and unreviewable, it’s hard to argue a university acting in good faith – the specific C6 principle – can keep thousands of pounds on the basis of one.

There’s also a tactics conundrum. If a university now revises its terms in response to any of the above, that implies it knows there was a problem with what it was doing. If it leaves them unchanged, it’s asking for a fight it’s probably going to lose.

Refund and games

Some universities have already worked this out. One classifies a visa refusal not as a forfeiture event but as a £500 admin fee – the student gets the rest back. Others keep deposits fully refundable at conditional-offer stage, with retention only triggered after unconditional status and a CAS-related event. Another runs a sliding scale tied to proximity to the start date, tracking the university’s actual diminishing ability to fill the place as term approaches. Others have just paused recruitment from some countries altogether and offered full refunds, rather than banking non-refundable deposits against a rising tide of refusals.

Those agents that PIE News have been canvassing are surely only a few weeks away from organising training for providers on consumer law compliance. They’d be right to do so.

None of this is difficult. The ones that haven’t done it have made a choice about who carries the compliance risk when the Home Office tightens the rules, refusal rates spike, and UKVI decides – sometimes incorrectly and always unreviewably – that a student isn’t genuine. The answer they’ve settled on is – students from Pakistan, Bangladesh, Nigeria and Sri Lanka.

If a place hasn’t been filled, no teaching has occurred, and the only reason money is being retained is to compensate a university for the administrative cost of maintaining its immigration sponsorship licence against a system its own sector body is documenting as unreliable – then what the university is doing isn’t charging a deposit.

It’s billing a student for a compliance service they didn’t request, didn’t benefit from, and may have been denied because a UKVI caseworker didn’t know that Norfolk is a county.

It’s both immoral, and unlawful – and needs to stop.