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Education Students Briefing: Looming UK consumer law changes, the impact on colleges and universities

  • United Kingdom
  • Education - Briefings

29-04-2014

There have been lively pedagogical debates within the education sector on whether or not students in further and higher education should be treated as consumers. However, as a matter of law, students are to be regarded as consumers because the legal relationship between colleges and universities, and each of its students, is one of contract. The “student contract” has received a significant amount of publicity over the past few months further to the Office of Fair Trading publishing  its report entitled “Universities’ Terms and Conditions” (February 2014)which considered the fairness of institutions imposing academic sanctions for non academic debts and the report of its findings on ITS Call For Information on the higher education market (March 2014) which raised questions concerning the fairness and reasonableness of conditions  found in some universities’ student contracts. Please see our briefings on these reports accessible here and here.

The report reinforces the position that, as consumers, students are afforded significant consumer rights when dealing with colleges and universities. Whilst the OFT has closed its current investigation without taking any action, colleges and universities need to be aware that there are imminent consumer law changes which will be implemented during the course of 2014 and beyond. It is, therefore, essential that colleges and universities review their current terms and conditions to ensure compliance with these new requirements.

Consumer Rights Directive

A new Consumer Rights Directive (the “CRD”) was adopted by the Council of the European Union and was published in the Official Journal in November 2011. Member states had until 13 December 2013 to adopt and publish measures to implement the CRD, so that its requirements could take effect from 13 June 2014. The main instrument the UK Government will use to implement the Directive in the UK is the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013.

The CRD covers contracts for sales of goods and services from businesses to consumers, including those made at a distance or away from business premises. It is particularly relevant to the student contract which is frequently entered into between an institution and a student other than “face-to-face”, for example by post, telephone or where students utilise electronic admission systems via the internet.   

The CRD seeks to ensure that consumers receive clear information on specific aspects of potential contracts, such as the main characteristics of the service to be provided, the price, and all additional charges and fees, before they sign a contract (especially where the contract is entered into other than face-to-face). The aim is to assist consumers to make informed choices, first time around.

The CRD provides consumers with other rights, too, including:

  • an extended 14 calendar day cancellation period for contracts entered into other than face-to-face;
  • a ban on the use of “pre-ticked” boxes where such use requires a student to incur additional charges, and instead requires students to provide their express consent to any such additional payments; and
  • a prohibition from charging students fees which exceed the cost borne by the university, for example, potential handling fees where credit cards are used to pay (please note that this prohibition has been in force since 6 April 2013 and contains a number of exemptions).

Failure to comply with the CRD could lead to (amongst other consequences) institutions incurring increased costs in dealing with student complaints and claims, adverse publicity, reputational damage, and legal action. In addition, students will not have to pay for any additional services or goods they have received (over and above those which relate to the main obligation under the student contract) in circumstances where the student has not provided their express consent to incur the relevant costs.

Consumer Rights Bill

In addition to the changes to be introduced pursuant to the CRD, the UK Government also announced in the Queen’s Speech 2013 that it was proposing to publish a new UK “Consumer Bill of Rights” which would merge all existing UK consumer protection laws and regulations in one place. Further to pre-legislative scrutiny, the Government introduced the Consumer Rights Bill into Parliament on 23 January 2014.

The  bill incorporates many of the recommendations made by the UK Law Commissions and BIS following their respective consultations and advice, and the  bill proposes some major changes to consumer law whilst seeking to make it clearer and easier for both businesses and consumers alike, to navigate the legal framework.

Some of the changes that will directly affect colleges and universities include:

  • statutory guarantees to apply to the supply of goods and services;
  • a consistent and clear set of statutory remedies to be available to consumers; and
  • clarification on whether “core terms” in consumer contracts, such as pricing terms, are   subject to an assessment for fairness, including the introduction of a new test of “transparent and prominent”, with statutory guidelines on what this means.

The Consumer Rights Bill (when incorporated into law), will have a significant effect in modernising consumer law, much of which was written around thirty years ago, particularly in relation to digital content, which is not catered for in the current regime. 

The bill is currently progressing through Parliament, with the initial expectation that it will be enacted in late 2015/early 2016 (although institutions are advised to monitor the progress of the bill).

Conclusion & Interim Practical Recommendations

Whilst the exact nature of the UK’s future consumer law landscape will be determined on the enactment of the Consumer Rights Bill, we are recommending that colleges and universities closely review their student contracts and contracting processes (particularly in respect of contracts entered into on-line, by telephone or by post) in light of the imminent introduction of the CRD. All institutions will need to ensure that they are fully compliant with the requirements under the CRD by no later than 13 June 2014.

Colleges and universities will, in any event, wish to ensure that their student contracts set out clearly and accurately the respective rights and obligations of the institution and the student. This will help institutions to ensure that the terms of the student contract are such that they can deliver on their promises and rely on the obligations imposed on students as being fair and reasonable.  As a result of this, students will know what they are signing up to and what they should be provided with, and their expectations will be managed more effectively. 

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