England¡¯s Office for Students has been warned to tread carefully as it prepares to take on new powers over franchised provision.

The regulator has?proposed a new condition of registration for universities, known as the E8 condition, which would require providers with franchised arrangements to strengthen their oversight and increase transparency.

The condition would require institutions to maintain a ¡°comprehensive source of information¡± about these arrangements and disclose?how much they earn?from?the agreements.

It would also allow the OfS to issue ¡°subcontractual arrangement directions¡± (SCDs), which require providers to take ¡°appropriate¡± action to address potential risks to students and taxpayers.

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This could see providers told they must refrain from entering into new relevant SCDs and force them to pay refunds or compensation to students if a franchised partner fails to provide relevant courses to students.

In?its response to the consultation on the plans Universities UK said: ¡°We share a view that further assurances about the oversight and transparency of franchised provision would be beneficial. It is important, though, that any new OfS interventions or powers are used proportionally within clear parameters, and that institutional autonomy, with regard to whom providers can partner with and when, is protected.¡±

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It added that the English regulator ¡°already has powers through its regulatory framework to carry out many of the proposed new functions¡± and that ¡°without clearly defined parameters about when and how regulatory activity will be activated, there is a risk of regulatory duplication and an increased chance of disproportionate regulation¡±.

The OfS needs to provide ¡°greater clarity¡± around how it will define ¡°reasonable grounds¡± and ¡°significant risk¡± when deciding to issue a direction, UUK said.?

In particular the representative group raised concerns that SCDs could be issued without investigation, adding that ¡°robust governance and oversight mechanisms are needed to ensure that sanctions are only deployed when necessary...and when existing regulation fails to address risks¡±.

Given that the proposals would permit the OfS to halt payments to providers, imposing a direction should be ¡°reserved for more serious matters¡±, with UUK adding that institutions should be given the opportunity to resolve an issue first.

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It suggests that the OfS could establish ¡°a panel through its scheme of delegation to take decisions¡±, and said ¡°in cases where issues, risks or interventions are more serious (eg suspension of payments), it will be essential to have established and robust oversight¡±.

UUK also questioned why providers will be asked for a ¡°rationale¡± for entering into new arrangements, adding that this raises questions over ¡°how¡± the OfS will use this information in regulatory action, and ¡°any moral or principled judgement that could be attached to this¡±.

The OfS declined to comment.

juliette.rowsell@timeshighereducation.com