How is OfS going to monitor higher education providers?

If you’ve been wondering how OfS would monitor higher education providers once it had completed its initial registration process, I have exciting news.

Back on 19 Jul 2018, OfS excitedly announced that 42 providers had been officially added to the register, and the idea was that it would clear the rest of the applications in the autumn, giving it plenty of time to set out its approach to ongoing monitoring in time for receipt of its full powers in August 2019. Alas, things haven’t gone entirely to plan, with each set of board papers since briefing on further delays and signs of some applications ending up in legal conflict.

But now – presumably because a series of events explaining ongoing monitoring have already been booked for early November (and after all, it’s fifteen months since that initial batch made it on), OfS has published two new regulatory advice notes – #15 covering monitoring and intervention, and #16 explaining reportable events. And they couldn’t be any further from the old QAA assurance process if they tried.

Keeping an eye on the baseline

Note #15 opens with some technical stuff – duties of the accountable officer, and how it will share information with bodies like UKRI and the OIA. Then we get to the meat – how OfS will monitor compliance of registered providers with the ongoing conditions of registration.

The idea is that following the initial phase, and then at any one time in the future, OfS has in its corporate head a sense of how close to breaching any of the conditions of registration a provider is. It then leans on providers in relation to identified risk – either through a quiet bit of monitoring, or a public slice of shaming.

Basically, there’s then monitoring activity that allow OfS to respond proportionately to regulatory risks and identify changes to risk levels – very much the point where Michael Barber’s theory meets reality.

General monitoring provides these things:

• Lead indicators (indicators constructed from data and information flows, in “as near real time” as possible, that will assist OfS to identify trends and anticipate future events).
• Reportable events (a requirement to notify OfS of material decisions/issues/changes).
• Other intelligence and information obtained by OfS, like whistleblowing or student complaints.

The big difference here to “quality assurance” is that this is, for the most part, very hands off. OfS isn’t actively doing anything to assure quality – it’s just assuring us that quality is there until it learns it might not be. And even then, it’s assuring that quality in the main by looking at outcomes rather than inputs. That is what it is – but as we’ve noted before in relation to condition B3 (“the provider must deliver successful outcomes for all of its students”), providers now live in constant threat of B3 thresholds which they can’t actually see.

To give you a sense of how each of the types of information relate to each of the regulatory conditions, there’s even a matrix – because there’s nothing like a logic table to make arbitrary decisions look evidence based.

[table id=195 /]

This all means that (for example) OfS will be judging whether providers comply with the Access and Participation duties by using all five sorts of intel. But when it’s looking at the facilitation of electoral registration duty, it will only use “random sampling” and “notifications”, which is sort of like a complaint but not actually – it’s more like your students’ union grassing you up for not funding their voter registration stalls.

Once it’s used all this data, it then applies a “mitigation” if there’s increased risk of a breach, in four categories:

• Formal communication – OfS will write to a provider where it considers that there is evidence that indicates an increased risk of a future breach of a condition and where OfS might wish to intervene (let’s call this a “Provisional” mitigation)
• Enhanced monitoring: This includes any requirement for a provider to submit additional information to OfS that extends beyond the information requirements placed on all providers as part of general monitoring (let’s call this a “Bronze” mitigation). Remember reports over the summer suggested that 163 providers have “enhanced monitoring” right now.
• Specific ongoing condition of registration: A specific condition sets out any requirement placed on a provider under section 6 of HERA. For example, a requirement that a provider submit an improvement plan setting out how it will deliver a “material improvement in continuation and completion” rates for specific groups of students (let’s call this a “Silver” mitigation). 19 providers have had one of these so far.
• Fines: And, of course if there’s an actual breach, there’s then some detail in the doc on fining, or “Gold”, if you will. July’s Board papers told us that the board will approve a “monetary penalty framework” which will set out the circumstances in which a monetary penalty may be imposed by the chief executive or the Director of Competition and Registration – although we’ve not seen it yet.

Finally in this note, there’s a fun section on “voluntary deregistration”, which is notable for its detail on when OfS has reached a provisional decision to deregister a provider. If at that point the provider requests deregistration on a voluntary basis, OfS can decide that the provider can’t do it voluntarily – it has to be thrown off the register publically.

Events, dear boy, events

Regulatory advice 16 covers reportable events, defined in the regulatory framework as:

any event or circumstance that, in the judgement of the OfS, materially affects or could materially affect the provider’s legal form or business model, and/or its willingness or ability to comply with its conditions of registration.

These matter because – along with “lead indicators” and “other intelligence and information”, they are a key way for OfS to keep tabs on providers and their compliance with baseline requirements. As a result, it’s the responsibility of providers to report them (“within five days of the date that the event is identified”) and to use their judgement to consider whether an event is reportable (although ultimately OfS, not the provider, will determine whether an event is reportable or not reportable). There’s even a section on process and potential penalties for not reporting an event that’s reportable – it’s basically saying that if you don’t tell OfS something material, the lack of reporting would be taken into account when considering the provider’s compliance with the “management and governance” conditions.

Anxious accountable officers might look at this and adopt an approach of cautious over-reporting, but that would be a problem too. If OfS determines that a reported event should not have been reported by the provider, it will consider whether the reporting raises concerns about the provider’s management and governance arrangements (under condition E2), or its approach to accountability (under condition E3) – and may decide to take further regulatory action in relation to the provider. And a regular or repeating pattern of over-reporting could be a behaviour which gives cause for concern in relation to management and accountability (condition E2 again) that may warrant “reconsideration of the risk of a future breach of this condition”.

Best of all, if you’re not sure whether to report or not, you’d better not go seeking advice from OfS. “Where a provider seeks to abdicate responsibility for decision making, and seeks steers from the OfS, this behaviour may indicate non-compliance with condition E2”. A kind of damned if you do, damned if you don’t, and damned if you dare ask kind of vibe.

Not your type

So what has to be reported? Paragraph 494 of the regulatory framework sets out the types of events that must always be reported to OfS, and providers are asked to familiarise themselves with its contents. The problem is that for a principles-based regulator concerned with contextual risk, these are necessarily defined at category level – so in case you’re not sure (and given the penalties for over or under reporting, you need to be sure), there’s a handy set of examples.

Doubtless these examples were fun to develop in one of those meetings with lots of flipchart paper and scented markers somewhere in Nicholson House, and bear absolutely no relation at all to any actual things that have been happening in real higher education providers in recent months. They include:

• “a substantial increase in the number of new students registering at a provider”- this could affect the provider’s ability to satisfy condition E2 (management and governance) in the short term, and conditions B2 and B3 (quality and standards) in the longer term, where the increase raises concerns about whether such growth was effectively planned and managed, or whether the quality of student support or student outcomes will be maintained for larger numbers of students;
• “the closure of an overseas campus, even if it was not material to the provider’s business model” – OfS says this could affect a provider’s ability to satisfy condition D (financial viability and sustainability), condition C3 (student protection plan) and condition E2 (management and governance);
• “significant financial events including material downturns in revenue or revenue forecasts, or financial performance or position” – even if these were not material to the provider’s business model, changes like this might be material to a provider’s ability to satisfy the conditions on quality and standards due to loss of resource. Similarly, a substantial decline in student numbers might affect a provider’s ability to satisfy the B conditions (quality and standards) due to loss of resource;
• “a change of ownership of a provider could affect its ability to satisfy a number of conditions, including condition C3, condition D and condition E2”. It could also affect the provider’s eligibility to register with the OfS, for example, if the new owner is already a registered provider, or if the provider is acquired and becomes an English campus of a large overseas higher education provider, this may affect the provider’s ability to meet the OfS’s definition of an English higher education provider;
• “suspected or actual fraud or financial irregularity which might take the form of theft or money laundering might relate to condition E2 (management and governance)” – OfS says a fraud perpetrated by an accountable officer or member of the governing body would be material – even if its monetary value was small.

That’s not all of course. Any other material events with implications for satisfying conditions relating to the quality and/or standards of provision have to be reported in, as does any event which affects (or could affect) a provider’s willingness or ability to maintain approval of its access and participation plan by the Director for Fair Access and Participation – like a major restructuring or redundancy programme affecting recruitment, admissions and access and participation teams at the provider, or an expected failure to meet targets in the access and participation plan.

Similarly, if there’s a significant financial loss that threatens a provider’s ability to continue to comply with any or all conditions of registration, or significant changes in the membership of a provider’s governing body (or turnover in its senior management team), that has to be reported in too.

Finally, it’s not just judging whether an event is actually reportable that matters. Reporting an event considered by a provider to be “unexpected” which should, in the opinion of the OfS, have been anticipated by the provider may result in “further assessment of the provider’s regulatory risk” in relation to the conditions on provision of information to the OfS and management and governance.

And you don’t want to be late either – if OfS decides that a provider has been late in submitting a reportable event to the OfS, this could indicate that the provider is “at increased risk of a breach of condition F3 [the “you have to report reportable events” one], and potentially conditions E2 (management and governance) and E3 (accountability)”.

All the fun

This could all be lots of fun, and could have some fascinating implications for governance too. Imagine that you’re the accountable officer, and you get wind of some drop out stats that mean you’ll probably miss one of your targets in your APP. You have five days to tell OfS – and presumably, because you’re accountable on behalf your governors, you’ll need to be telling them too. The scenes!

So to sum up – there’s a regulator that assures baseline quality not by looking at what you do, but the outcomes from it – like selling clothes and judging the quality not on whether they survive a wash, but on whether people think you’re stylish or whether your “interview tie” gets you a swish job. Most of the outcome judgements are deeply contextual, and we don’t know what the minimum outcomes are. If something makes you think you might not meet the minimum outcomes that you don’t know about, you have to tell OfS – but if you tell them when you didn’t need to, you’ll be in trouble. If you don’t tell them when you did need to, you’re in trouble too. And don’t you dare ask if you should or shouldn’t tell them, because not knowing whether an event means your outcomes are close to getting you into trouble will get you into trouble.

Makes perfect sense to me.