Franchised higher education providers with more than 300 students on their books will be required to register with the English sector regulator as part of government efforts to crack down on “rogue operators”.
The Department for Education has outlined its plan for stricter regulation of franchised provision after a doubling of the number of students taught in this way in recent years, and concerns that millions of pounds of student loan money was being lost in fraud.
Currently those delivering franchised courses do not have to be registered with the Office for Students (OfS), but their students can still access government-backed finance via their “lead provider”, usually an established university. More than half of the 341 franchised providers identified in 2022-23 were unregistered, the government said.
Ministers are concerned that the “absence of direct oversight by the regulator for many franchise partners is creating risks, both to the quality of provision and the public money invested in it”, according to a document outlining the planned changes.
Under proposals put out for consultation on 30 January, any provider with more than 300 students would be required to register in order to continue to access student finance.
The move would bring them under the direct oversight of the OfS, which has the power to fine or suspend the registration of any provider where they identify quality concerns.
“We are committed to cracking down on rogue operators who misuse public money and damage the reputation of our world-class universities,” said education secretary Bridget Phillipson.
“Franchising can be a valuable tool to widen access to higher education, and these proposals will ensure students can trust the quality of their courses, no matter where or how they choose to study.”
University partners would still “remain responsible for ensuring their subcontracted arrangements meet quality and standards requirements” under the new rules, which are earmarked to come into effect in spring 2026.
Institutions with fewer than 300 students are seen as small enough for a lead provider to be able to “deliver strong and effective oversight” without the need for OfS registration.
The government also said the 300-student threshold would capture 83 per cent of students at currently unregistered franchised providers and protect 92 per cent of student loan funding.
Some franchised providers which are regulated by another body – for example sixth-form colleges or NHS trusts – would be exempt from the new requirement.
Currently no new providers can register with the OfS after the regulator suspended this area of its work to concentrate on university finances.
This pause is due to end in August – well ahead of the date the planned reforms are due to come into effect – but it is feared that the backlog of registrations and the fact the regulator has promised a “staggered” restart will lead to further delays.
Even before the suspension, the regulator has long been criticised that its registration processes are too slow and the DfE promised another consultation will be launched shortly on “changes to requirements for providers that wish to join its register to ensure they are all managed and governed effectively”.
Franchising has proven a controversial practice in the sector, with some claiming it helps universities reach a wider group of students – particularly those based in “cold spots” – and provides a valuable new revenue stream, with university partners taking a large proportion of the fees.
But an investigation last year by the National Audit Office that identified £2 million lost in fraud connected to franchised provision in 2022-23 raised alarm bells and sparked a drive for tighter regulation.
Alex Proudfoot, the chief executive of mission group Independent Higher Education that represents many providers delivering franchised courses, said he supported the principle behind the proposal but said the OfS’ registration processes will have to change to make it a reality, pointing out that only seven institutions made it on to the list in 2024.
Having to register what could be hundreds of new providers in a two-year period would need “substantial extra resource” as well as a “dramatic reprioritisation of effort” and a “cultural step change” within the regulator, said Proudfoot.
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