Universities ‘must be careful not to oversubscribe’ after CMA warning

It comes after record-high exam results in August left several courses oversubscribed as more applicants achieved their required grades than providers anticipated.

In a statement (3-page/149KB PDF) reiterating its views, the consumer law watchdog said students “should be treated fairly by businesses, as required by consumer protection law.”

“When an HE provider makes an offer of a place to a prospective student and the offer is accepted, in our view a binding contract is made between the HE provider and student.”

“The HE provider has agreed to reserve a place and allow the student to enrol on the relevant course if they meet any specified entry requirements,” it added.

The CMA said terms in an offer that give HE providers “wide discretion” to withdraw were “likely to be unfair under unfair terms legislation.”

“Rights and duties under a contract cannot be considered fairly and evenly balanced unless both parties are equally bound by their obligations under the contract and the general law.”

It added that terms designed to limit a HE provider’s liability if it withdraws an accepted offer were “inappropriate and potentially unfair,” citing the inconvenience and costs that a student could be left with.

Rami Labib, HE and commercial law expert at Pinsent Masons, said the CMA’s statement meant HE providers would have to be “careful” in future.

“Previous recruitment cycles have seen certain providers in the sector introducing oversubscription conditions that permitted them to withdraw places where the number of students meeting offer conditions exceeded the number of places available,” he said.

“This has prompted the CMA to issue this guidance which serves as a reminder to the sector that students must be treated fairly and afforded appropriate recourse in the event of provider default.

“Whilst the guidance itself introduces nothing new by way of legal concept, in the context of admissions, it emphasises that providers will have to be careful going forward not to “oversubscribe” and rely on unduly broad rights to withdraw offers as a “get out of jail free card,” Labib added.   

“In short, the regulatory message is that if providers are to make offers, and the conditions of those offers are met, they should be prepared to honour them.”

Richard Snape, competition and consumer law expert at Pinsent Masons, said that the CMA’s position has remained consistent for a number of years.

“Since publishing a report into consumer protection compliance and the HE sector in 2016, the CMA has maintained its focus on the sector, obtaining numerous undertakings from HE providers to ensure compliance with a variety of consumer protection issues,” he said.

“The CMA’s latest publication reinforces its message that it remains committed to ensuring compliance across the industry.

“HE providers should also be mindful of recent consultations regarding proposed extensions of the CMA’s consumer protection regime,” Snape added.

“If the proposals are adopted, it is expected that the CMA will have greatly enhanced enforcement powers, highlighting the importance of putting in place adequate compliance measures now.”