Sunday, January 31, 2010

RTO as Business, Rorts, Scams and Money Laundering

This weeks' news of another international college in the business of providing education for international students, being placed into the hands of receivers, leaves a bad taste in the mouth.
Obviously education and training IS a viable industry, and as in all industries, there are players who just want to take the money and run. For those of us whom have invested lifetime careers in the training industry, and whom believe in the benefit of accessible education for all, the feeling of being besmirched by rogues and once again played as the value-less poor cousins of the Higher Education industry is difficult to avoid. The repercussions of this behaviour on the industry as a whole are many. RTO's have lived for many years with regulation and governance, and the behaviour of the few has led to increased regulation for the many, and to increased costs of business. The annual payment of Student Tuition Assurance Scheme fees would be seen by many other industries as outrageous, and yet for RTO's it is an inescapable cost of doing business. Once it only applied if the RTO were seeking the use of Government funding, now under the recently issued Guidelines for 2010, it has become a condition of registration for all RTO's.
"Where the RTO collects student fees in advance it must ensure it complies with one of the following acceptable options for:
 (Option 1) the RTO is administered by a state, territory or commonwealth government agency
 (Option 2) the RTO holds current membership of an approved Tuition Assurance Scheme, or
 (Option 3) the RTO may accept payment of no more than $1000 from each individual student prior to the commencement of the course. Following course commencement, the RTO may require payment of additional fees in advance from the student but only such that at any given time, the total amount required to be paid which is attributable to costs yet to be incurred on behalf of the student for tuition or other services yet to be delivered to the student does not exceed $1,500, or
 (Option 4) the RTO holds an unconditional financial guarantee from a bank operating in Australia for the full amount of funds held by the RTO which are prepayments from students (or future students) for tuition to be provided by the RTO to those students."

What other business is only allowed to take payments of no more than $1000.00 upfront?
What other business pays tens of thousands of dollars insurance on top of public liability and professional indemnity, for product which is intangible? Yes businesses insure against loss of tangible assets, (stock), but they do not normally insure against their own collapse and inability to supply.
Whilst the regulatory authorities have increased their powers to investigate and negotiate the continuance of the College business, there is still little they can do other than react to circumstance. In this particular instance it seem the money is gone overseas and it will be difficult to bring international owners to book in Australia. In the meantime, the extra costs imposed on small to medium businesses have done little to reassure the clientele or to improve business. As noted by my collegue, Mr. Neil Edwards, CEO of Chifley Business School, in his submission to the Bradley enquiry,
"the concept of a seamless national regulatory regime for higher education is good. Multiple regulatory processes constitute an unreasonable burden on private providers, unnecessarily compounding the competitive disadvantage against the larger resources and self-evident standing of public universities." and in this instance we can add and self-evident standing of the TAFE system.