The OfS' new condition and requirements on subcontracting in the HE sector – addressing 'the scandal'

In light of recent issues uncovered regarding higher education academic franchising and partnerships, the government, regulatory bodies and the wider sector have carefully discussed how to introduce stronger controls and oversight. In particular, the Office for Students (OfS) – the regulator for higher education in England – has introduced new requirements for providers who subcontract the delivery of part or all of their courses.

This article discusses these requirements, the context behind their introduction, and practical points for universities and other providers to consider.

The consultation and the new condition of registration

The OfS ran a consultation in 2025 on the subcontracting (or franchising) of higher education courses – ie when a student is registered with a particular provider but is taught by another provider as part of a subcontracting arrangement. The OfS published its results in March 2026, noting that there have been "increasing concerns that some subcontracted provision may be creating significant risks to students and taxpayers".

Prior to the consultation, there has been coverage regarding the so-called 'franchising scandal' and the problems around universities subcontracting other organisations to teach courses on their behalf. As part of an official briefing on the matter, one of the OfS' senior directors noted the "serious risks to public money" regarding such arrangements.

The underlying issues include:

• student recruitment and retention being prioritised over course quality;
• students with weak English language skills not receiving suitable support;
• there being hundreds of franchised institutions which are not directly regulated by the OfS (instead, the onus is placed on the accredited university); and
• according to research by the National Audit Office, an alarming rise in fraud linked to franchised higher education (HE) providers, including organised crime, fraudulent recruitment processes and academic misconduct (such as falsified language testing and diverting students to so-called 'essay mills').

The OfS' initiative follows the Quality Assurance Agency for Higher Education (QAA) introducing follow-up guidance to its 2024 Quality Code covering partnerships with third-party organisations and how providers can manage those relationships effectively. More recently the QAA has also produced resources to help providers meet the OfS' subcontracting requirements (discussed below).

Following the consultation outcome and in response to concerns about franchising, the OfS has introduced a new general ongoing condition of registration which regulates subcontracting arrangements (this was proposed when the OfS launched the consultation). The OfS' conditions set the minimum benchmarks which providers must meet in order to remain registered.

The new condition E10 took effect at the end of March and applies to lead providers that have, or expect to have, 100 or more students registered on a relevant subcontracted course. Some arrangements are exempt, such as overseas schemes and certain medical programmes. The condition applies from one year before the students start on the course, or from the point that the provider should reasonably have known it would reach 100 or more students, whichever is later.

The substantive obligation requires providers to identify and manage risks to students and taxpayers in all subcontracting arrangements. Examples include poor-quality teaching, flimsy admission standards and disruption to students if a delivery partner collapses.

Providers must then establish and maintain a subcontracting information source (SIS), which sets out policies, procedures and other provisions relating to subcontracting arrangements and evidence compliance with the OfS' obligations. Providers are expected to have implemented their SIS by 30 June 2026 and must then ensure that existing and future agreements with subcontractors adhere to the parameters of the SIS.

Practical steps for higher education providers

The new condition and its ensuing obligations will undoubtedly require providers to review their arrangements and, in many cases, implement much-needed changes. There are a number of core themes which providers (and their lawyers) ought to consider:

• Scope: as a first step, providers should examine whether they are caught by Condition E10. In particular, note the OfS' guidance that "a provider must also meet the condition obligations where it has concluded (or reasonably should have concluded) that there is a material likelihood that it will have 100 or more students registered on relevant subcontractual courses during a given academic year". There are specific provisions governing when E10 takes effect depending on anticipated student numbers and the OfS reserves the right to assess providers who failed to identify the likelihood of crossing this threshold. Also, as alluded to above, some subcontractual arrangements are not caught by the condition at all; importantly, overseas delivery and online courses for students who are ordinarily resident outside of the UK fall outside the scope of E10.
• SIS: as noted above, a core requirement of condition E10 is preparing and maintaining the SIS, which serves as a provider's blueprint for their subcontracted delivery. The deadline is 30 June 2026, and the OfS has compiled a helpful resource for providers. Note the OfS' comments on "adaptability" and the importance of ensuring that policies and procedures remain fit for purpose "including where there is significant growth in the number of students registered on courses provided for under those arrangements".
• Contracts: needless to say, a university's contract with its third-party provider must contain robust and effective provisions in order to meet the standards required by Condition E10. For example, this includes appropriate clauses to address poor performance that, as noted by the OfS, go beyond simple key performance indicators (KPIs) or other abstract metrics and enable more proactive risk monitoring and mitigation (such as clear tests and intervention rights). The OfS also highlights the importance of varying existing contracts where necessary to ensure alignment and compliance with the SIS.
• Due diligence (as ever): it appears that many of the problems which have arisen recently due to sub-standard franchising models stem from universities not carrying out sufficient due diligence (or ongoing monitoring) of their partners. This resulted in poor quality academic delivery, students wasting fees, and ongoing reputational harm for the universities. Therefore, comprehensive due diligence steps are essential as part of the pre-contract/procurement phase. A detailed franchising agreement is not a substitute for careful due diligence – the legal provisions cannot exist in a vacuum and will need to be informed by the partner-specific risks that are uncovered prior to drafting.
• Reporting: the OfS has also updated its guidance on reportable events, with a new section added regarding subcontractual arrangements. Examples include entering into a new subcontractual framework and more adverse issues such as allegations of widespread academic misconduct.

Overall, the new condition would appear to be a logical corollary to the heightened scrutiny into universities' subcontracting arrangements. The requirements are certainly comprehensive, with the OfS keen to keep a close eye on providers' arrangements; however, the hope within the sector is that these new obligations do not stifle the subcontracting ecosystem which has proven increasingly popular (and lucrative) for many universities.

Farrer & Co's Education team continues to advise clients on their various types of partnership arrangements, including compliance with the latest OfS requirements.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances. 

© Farrer & Co LLP, June 2026