To Everyone

We at Hertfordshire examined this area some years ago, and decided that to
avoid complications we would offer students the facility to pay their fees
in no more than 3 instalments.  We used to make instalment charges, but
dropped these some years ago to ensure that all students were treated
alike.  That is, because CVCP (as it then was) advised universities that to
charge "interest" on the standard DfEE-set tuition fee was a breach of the
"no top-up fee" provisions, we dropped all charges to instalment payers (in
whatever category) in the interest of equal treatment and admin simplicity.

Philip


At 11:49 AM 12/02/2001 +0000, you wrote:
>Hi - I'm not sute how this topic got ressurected but anyway 
>I'm quite happy to copy my findings - the following is a 
>copy of a memo I sent to our Head of Financial Accounts - 
>he was responsible for initiating the enquiry.
>
>"Peter - you asked me to look at the implications of
>offering undergraduate fulltime home students the facility 
>of paying their tuition fees by direct debit with specific 
>reference to the Consumer Credit Act.
>
>I spoke to a Trevor Single at the Office of Fair Trading 
>and he explained that we can offer the students 4 
>instalments and not be subject to the Consumer Credit Act 
>regulations. Any more than 4 instalments and we have to 
>conform to the regulations. I therefore sent for, and 
>received, the following OFT booklets: - 
>
>Consumer Credit Act 1974: Cancellable agreements
>Consumer Credit Act 1974: Non-Cancellable agreements
>Consumer Credit Act 1974: Matters arising during the 
>lifetime of an agreement 
>
>In summary the Act lays down a comprehensive legal 
>framework to regulate consumer credit and consumer hire and 
>covers most forms of lending, up to £25,000. Businesses 
>must be licensed by the Office of Fair Trading. 
>
>The main aim of the legislation is to ensure that borrowers 
>are given full and accurate information, to enable them to 
>choose the best agreement for their purposes, and to inform 
>them of the legal rights that the Act gives them. 
>
>While there are some criminal offences in the Act, most of 
>its provisions are matters of civil law, and breaches often 
>make the agreement unenforceable against the debtor. The 
>licensing system does, however, allow the Director-General 
>to consider persistent breaches of civil provisions in 
>assessing whether a company should be allowed to retain its 
>license. 
>
>Among the many sets of regulations under the Act, are those 
>detailing how the Annual Percentage Rate of charge for 
>credit (the APR) is calculated, and the rebate of interest 
>to which a debtor is entitled, if he pays a loan early. The 
>Trading Standards Service uses computer programs to perform 
>these often complex calculations. 
>
>As you can see from the above, the spirit of the Act is
>aimed at those businesses providing credit to customers and 
>charging them interest for this facility - which is 
>obviously not our intention. However, the Office of Fair 
>Trading (OFT) fail to make this distinction and have 
>bundled organisations like ours in with commercial 
>businesses. 
>
>In an attempt to see what other Universities were doing I 
>sent an e-mail to the University's mailbase for finance 
>officers. This is a summary of a couple of the more 
>relevant responses: - 
>
>Bath - registered with local authority under the Consumer 
>Credit Act - they were advised that failing to register 
>would limit their ability to strike flexible payment 
>agreements with debtors i.e. £10 per week etc. - 
>'registration was simple and well worth the peace of mind' 
>
>Salford - 'The fact that institutions have failed to comply 
>with the Act by offering more than 4 instalments is not 
>necessarily a problem.  It would be if you wished to take a 
>student to court for non-payment of an instalment but that 
>is probably unlikely.  Any student who felt particularly 
>antagonistic could challenge the arrangement but, given 
>that the arrangement would have been made to make life 
>easier for the student I suspect it would not be taken 
>seriously by a court, although clearly you would be 
>reprimanded for failureto comply with the Act'. 
>
>My feeling at the end of this exercise is that the evidence 
>received is inconclusive. It  would appear that if we do 
>offer 5 or more instalments then technically we must 
>register with the OFT for a licence. The registration 
>process itself is not onerous but complying with all the 
>other requirements of the Act, do appear onerous i.e. 
>ensuring that borrowers are given full and accurate 
>information, to enable them to choose the best agreement 
>for their purposes, and to inform them of the legal rights 
>that the Act gives them - adopting the prescribed procedure 
>and using appropriate forms and wording etc. 
>
>There was a mixed reaction with regard to how other
>University's have acted. Some have registered, others 
>haven't bothered. 
>
>It is difficult to draw a sensible conclusion from this 
>information and provide you with some useful advice. My 
>feeling is that if we do offer 5 or more instalments, no 
>one is going to complain and therefore detection of any 
>non-compliance would be difficult.  There is no intention 
>to charge interest and as such this would not become a 
>contentious issue. 
>
>However, the section that explains that any breaches often 
>make the agreement unenforceable against the debtor, is 
>worrying because the Consumer Credit Act is highly 
>regulated and if our administration is not scrupulous in 
>adhering to those regulations, then students may be able to 
>avoid debt payments on a technicality. 
>
>Not sure how much this helps."
>
>Ray Lockyer
>
>On Fri, 9 Feb 2001 17:03:25 -0800 Godwin To 
><[log in to unmask]> wrote:
>
>> Raymond.
>> 
>> 
>> Did you get anywhere on this?
>> 
>> Leeds got some legal advice from their lawyer who 
>confirmed that 4 and > above needs a licence. Maybe some 
>HEIs failed to rekon this legal > requirement!!
>> > godwin To
>> goldsmiths College > 
>> > 
>> --On 18 January 2000 09:13 -0500 "Lockyer, Raymond" > 
><[log in to unmask]> wrote: > 
>> > Can anybody help - UWE is considering offering its 
>students > > the facility of paying their tuition fees by 
>direct debit. > > However, having contacted the DTI and OFT 
>it would appear > > that if we offer 4 or more instalments 
>then we will be > > caught by the Consumer Credit Act and 
>have to get a licence > > and have each student, paying by 
>DD, complete a credit > > agreement - plus we would have to 
>comply with all the other > > regulations within the act.
>> > > > However, speaking to colleagues in other HEIs it 
>would > > appear that, although they are offering payment
>> > arrangements involving 4 or more instalments, they are 
>not > > taking up the credit licence.
>> > > > Am I missing something - are we exempt - we will 
>not be > > charging interest - is this relevant? Has anyone 
>had a > > legal opinion? Do we have to comply with the 
>Consumer > > Credit Act if we offer DDs with 4 or more 
>instalments? > >
>> > Any help would be gratefully received. > >
>> > Thanks > >
>> > Ray Lockyer > >
>> > ---------------------------------------- > > Lockyer, 
>Raymond > > Email: [log in to unmask]
>> > "University of the West of England" > >
>
>----------------------------------------
>Lockyer, Raymond Email: [log in to unmask]
>"University of the West of England"
>
>
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Philip Hinchliff
Assistant Registrar (Projects & Registration Planning)
Room LB159, Main Building
University of Hertfordshire
College Lane
Hatfield AL10 9AB, UK   (internal ext 3167)

tel     01707 286 167   in UK   +44 1707 286 167    outside UK
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