Students as consumers: consumer law and the CMA

Marianne Williams & Samantha Rose Legal Services Office

Wednesday 23 September 2015

Students are consumers • For the majority of undergraduate and graduate

students, the decision about what and where they study is a one-off decision, which leads to a considerable financial investment over a significant period of time.

• For the purposes of the consumer legislation universities are ‘traders’ and students are ‘consumers’.

• Linked to the significant increase in undergraduate tuition fees and the rise of tuition fees more generally.

Relevant legislation

Consumer Rights Act 2015 – consolidates previous consumer legislation. Statutory rights include: • Section 49: services will be provided with reasonable skill

and care. • Section 50: information provided is binding if taken into

account, subject to any qualification provided. • Section 54: statutory remedies do not preclude other

remedies such as damages for loss. • Section 55: new statutory remedy of repeat performance

for breach of contract. • Section 62: unfair terms will not be binding.

Relevant legislation Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 • Regulation 13 - The contract is not binding until the

applicant is provided with main characteristics of the services, including the price; the complaint handling policy; information about the right to cancel, including a cancellation form; and where applicable, information about deposits or other financial guarantees. A change to any of this information made before entering into the contract or later, is not effective unless expressly agreed.

• Regulation 16 - The University must provide a copy of this information in a durable medium.

Relevant legislation • Regulation 30 - Provides for a 14 day

cancellation period for all distance contracts.

• Regulation 31 - If the University does not provide the consumer with the information on the right to cancel (including a cancellation form), the offer holder will have 12 months and 14 days after the day on which the contract was formed to cancel and receive a refund.

Recent scrutiny Office for Fair Trading (OFT) – February 2014 Limited to criticism of imposing academic penalties for non-academic debt (i.e. debt other than for tuition fees).

Competition and Markets Authority (CMA) – March 2015 Advice on Consumer Protection Law including information provision and the fairness of terms and conditions.

The ‘Which? Report’ - February 2015 Based on information gleaned from Freedom of Information Act requests. A ‘Which?’ consumer lawyer judged that over half (51%) of respondents use contract terms that give an unacceptably wide discretion to change courses or fees after enrolment.

Planned audit by the CMA in October 2015

Admissions process – research Misleading actions and omissions Information provided on behalf of the University, whether written, visual or spoken, must be correct and should not contain inaccuracies that may impact students’ decisions. This includes information in prospectuses, and on our website, as well as information given to prospective students through outreach activities, at open days and over the telephone.

Admissions process – making an offer • When the University makes an offer we must provide:

• A description of the course, including how long the commitment will last;

• The total price, including any ‘extras’ and a description of how any fee increases will be calculated over the course of the contact;

• An explanation of what may change during the course of the contract and how this will happen;

• The key contractual terms, including any which are surprising;

• Details of the right to cancel (including providing a cancellation form). Consumers have a right to cancel up to 14 calendar days from the date the contract is formed.

• Provided in a durable medium.

Admissions process – terms and conditions The University’s terms and conditions must not be ‘unfair’. In order to achieve this, they must strike a balance between the University’s rights and obligations and those of students. For example: • no wide discretion to vary course content or increase fees; • no limitation on liability for non-performance; • no blanket assignment of intellectual property rights to the

University; • no academic sanctions for non-academic debts (e.g.

accommodation); • easily located and accessed by students and applicants; • important or surprising terms highlighted; • written in plain and intelligible language.

If we get it wrong • Action by consumer law enforcers such as the CMA – can

bring civil proceedings or judicial review applications and have a range of other compliance options including for gathering intelligence and assessing compliance, and advising or funding individuals in legal action

• Action by other bodies who work with the CMA, such as the Advertising Standards Authority

• Action by HE sector bodies working with the CMA, such as the Quality Assurance Agency for Higher Education

• Action by students: complaints to the Proctors Office and then to the OIA; legal action for breach of contract or misrepresentation or under consumer legislation eg for unfair terms or misleading actions and aggressive practices.

What we’ve been doing Research and application stage: Review of admissions websites Review of prospectuses Contractual process Review of template offer letters (more important for graduates) Restructuring contractual process so the timeframe for the contract is different New terms & conditions and Course Information Sheets New wording re changes to fees and changes to courses University Card form to trigger registration Complaints New more student-friendly complaints procedure in the pipeline

Scenario 1 A professor assures a third-year undergraduate that, if he self-funds year-one of a PhD, it is ‘very likely indeed’ that a scholarship will be found or, if not, that the Department ‘will surely find funding from somewhere’. However, he does not fully appreciate the Department’s financial situation and does not have any control over scholarship allocation.

Scenario 2 A doctor decides to retrain as a lawyer and is keen to specialise in medical law. He conducts research into which universities offer medical law as an option and attends a number of open days. In a meeting with the admissions administrator at an open day he is told that the popular optional module, medical law, will be offered in his second year. But during year one the medical law expert leaves and is not replaced.

QUESTIONS?