Notice

Notice of Monetary Penalty in respect of QFI

Published 3 February 2025

Applies to England

© Crown copyright 2025

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In accordance with its powers under Section 151A(2) of the Apprenticeships, Skills, Children and Learning Act 2009 (“the Act”), and pursuant to its obligations under Section 151A(4) and 151A(5) of the Act, the Office of Qualifications and Examinations Regulation (“Ofqual”) gives notice that it has imposed a Monetary Penalty in the sum of £50,000 on  Qualifications for Industry (“QFI”) for the reasons set out below.

Summary

  1. On 1 October 2024, a Notice of Intention to impose a Monetary Penalty was issued to QFI (“the Notice of Intention”). On 8 October 2024, Ofqual published the Notice of Intention on its website.

  2. The Notice of Intention stated the proposed monetary penalty shall be in the sum of £50,000.

  3. QFI was given the opportunity to make representations about the Notice of Intention. QFI submitted representations to Ofqual on 28 October 2024 (“the representations”). The representations are summarised below.

  4. Interested parties were also given the opportunity to make representations about the Notice of Intention. No representations were received.

  5. On 6 December 2024, Ofqual’s Enforcement Panel (“the Panel”) considered the representations.

  6. Following consideration of those representations, the Panel confirmed its provisional decisions and has imposed a monetary penalty in the sum of £50,000. The representations are summarised below (highlighted) followed by the Panel’s considerations.

  7. Save as is necessary to address the representations, this final notice does not repeat the matters set out in the Notice of Intention. This document should be read alongside the Notice of Intention.

Breaches of the Special Condition

QFI’s Representations

8. The Notice of Intention, at paragraphs 19 and 20, explained the Panel’s conclusion that QFI had failed to comply with Special Conditions QFI2.1(a) and (b).

9. QFI disputes the finding that it breached the Special Conditions, stating:

(a) QFI considered that restrictions on the number of Learners applied only to the qualifications which were under Ofqual’s regulation at the time the limit of 200 Learners was set and at no time did QFI exceed this limit for the related standards.

(b) The additional Learners which took QFI above 200 were training across approximately 40 Standards which were under the approval of the Education and Skills Funding Agency (ESFA). It was only as a result of the Government deciding to appoint Ofqual as the exclusive external quality assurance provider that these additional Standards came under the auspices of Ofqual with Learners already attached to them

(c) The volume of Learners on Standards regulated by Ofqual did not therefore occur as a result of any action taken by QFI but only as a result of the Government’s decision to transfer responsibility to Ofqual and so QFI could not do anything other than continue to provide services to such Learners. To refuse to provide a service to those Learners would have disadvantaged them, particularly where QFI was the sole organisation providing for certain Standards.

(d) In such circumstances QFI therefore made the following requests for expansion to Ofqual:

Expansion request 1 Nov 2021 Expansion request 2 May 2022 Expansion request 3 Aug 2022 Expansion request 4 Jan 2023
8 standards 16 standards 16 standards 6 standards
326 assessments confirmed 298 assessments forecast 298 assessments forecast 233 assessments forecast Application withdrawn

(e) While there was a formal process for Special Conditions to be amended, as these were for Standards for which Ofqual had previously not been the relevant quality assurance providers it was reasonable for QFI to assume that the formal process of seeking a variation of the Special Conditions did not require to be followed or that if the requests made to Ofqual were not in the correct form that Ofqual would advise QFI accordingly.

(f) Ofqual approved QFI’s expansion requests, along with Learners attached and numbers forecast as shown in the table above; this led QFI to assume this was because Ofqual acknowledged no further action was required. It is now assumed it was because Ofqual did not have the capacity to manage such requests at the time of it transitioning to become the exclusive external quality assurance provider. That however is a failing on the part of Ofqual not QFI.

(g) QFI while acknowledging it provided services to more than 200 Learners genuinely in good faith did not consider that it was acting in breach of the condition. Further, Ofqual’s investigation was not prompted by complaints from Learners or course providers. It is believed that it was, in fact, prompted by concerns raised by competitors of QFI who were envious over the success and quality of QFI’s services. It is also noted that a competitor of QFI and paid consultant of Ofqual was involved in the investigation process and there was a conflict of interest.

Enforcement Panel’s consideration

10. The Panel has considered these issues previously, setting out a detailed chronology at paragraphs 19.24 to 19.85 of the Notice of Intention following consideration of the evidence.

11. QFI has not provided any additional evidence for consideration by the Panel.

12. The Panel finds that the representations do not reflect the evidence. The Panel is satisfied that the evidence summarised at paragraph 19.28 of the Notice of Intention shows QFI was aware of the need to apply for further Ofqual recognition (expansion) should it wish to continue to offer EPA standards as they transitioned across to Ofqual regulation. QFI’s decision to submit expansion requests was a decision taken by the awarding organisation – it is not the case that additional standards became part of QFI’s regulated offering as a result of actions taken only by others, as the representations might imply.

13. It was reasonable for Ofqual to assume that QFI would at all times follow the notification process set out the in the Special Conditions if it believed it was likely to exceed the cap imposed by those conditions and that QFI would explain the increase it considered necessary. It is QFI that was in the best position to determine how many Learners it had registered on its qualifications at any one time, and how many Learners it was assessing in any rolling 12-month period.

14. On 14 June 2022, and a number of occasions subsequently, QFI was informed that the caps remained in place [paragraphs 19.60 to 19.85 and 20.2 to 20.7 of the Notice of Intention].

15. QFI Advisory Board meeting notes from 18 August 2022 demonstrate that QFI was aware of a risk that it may fail to comply with the Special Conditions if they remained in force. The meeting note demonstrates a reasonable step QFI could have taken if it was genuinely unclear as to the status of the Special Condition – it could have raised the matter with Ofqual. Notwithstanding the steer from QFI’s Advisory Board, Ofqual’s investigation found no evidence that QFI contacted Ofqual to ask whether the special condition had been removed.

16. Although QFI had incorporated projected numbers in all its expansion requests, the Panel finds that there was no proper basis for QFI to presume that a decision to approve the expansion request meant the Special Condition had been lifted or varied, in the absence of any notification from Ofqual. The Panel remains of the view that QFI either wilfully and knowingly breached the Special Condition, or was grossly negligent if it in fact assumed at any stage that the Special Condition no longer applied. In either circumstance, it cannot be said that QFI was taking all reasonable steps to comply with the Special Condition and there must have been a significant failure of governance at QFI.

17. The Panel observes that QFI’s initial explanation for exceeding the cap, provided through its Responsible Officer on 12 July 2023, was that there had been no attempt by QFI to stay within the cap imposed on the registration of Learners because to do so would have a detrimental impact on QFI’s business. This statement supports the view that QFI’s non-compliance was deliberate- it chose not to cap the number of registered Learners due to the impact compliance would have on its profitability.

18. In summary, having carefully reviewed the representations, the Panel does not consider that any of the matters raised therein affect its earlier decision. The Panel remains of the view that QFI breached the Special Conditions for the reasons set out in the Notice of Intention and above.

Conflict of interest

QFI’s representations

19. As part of its representations, QFI stated: “…that it is also noted that a competitor of QFI and paid consultant of Ofqual was involved in the investigation process and there was a conflict of interest.” The Panel has considered whether this contention has any impact on its decision.

Enforcement Panel’s consideration

20. The role of the Panel is to consider the case before it and make a decision as to whether or not the awarding organisation has failed to comply with its Conditions of Recognition and if so, whether or not Ofqual should take any enforcement action against the awarding organisation.

21. As decision-maker, the Panel has no role in the investigation process and makes its decisions based solely on the evidence which is presented to it.

22. Each of the decisions set out in the Notice of Intention reflected the Panel’s consideration of the evidence and arguments presented by Ofqual’s VTQ team, which had been disclosed to QFI through a statement of case in advance of the Panel’s first meeting, and the written submissions provided by QFI in response to that statement of case.

23. At paragraph 19.86 of the Notice of Intention, the Panel reflected:

The evidence relating to QFI’s failure to comply with the Special Condition primarily relies on documentary evidence, including QFI’s own records. After an examination of the evidence, the Panel is satisfied that the evidence related to QFI’s non-compliance with the Special Condition is compelling.

24. In the representations, QFI has not explained what evidence it considers is affected by the alleged conflict of interest and why that evidence should be excluded from consideration. More importantly, QFI has not set out how any perceived conflict of interest affects any of the evidence on which the Panel relied – as set out in the Notice of Intention - and in particular the finding, above, in relation to QFI breaching the cap imposed by the Special Conditions.

25. For the purposes of reaching a final decision, the Panel has reviewed evidence collected by Ofqual. The Panel notes that QFI accepts that Learner numbers exceeded the numbers specified in the Special Condition. The issue in this case was whether QFI took all reasonable steps to comply with the Special Condition. The Panel remains of the view that the breach of the Special Condition is proved by documentary evidence, including correspondence between Ofqual and QFI, QFI’s own records and admissions by its Responsible Officer. The Panel has not been able to identify any way in which any of that evidence could conceivably be affected by the conflict of interest which QFI alleges and therefore finds that there is no reason to consider excluding any of that evidence.

Factors when deciding to impose a monetary penalty and in what amount

QFI’s Representations

26. The Notice of Intention set out the Panel’s provisional decision that QFI’s failure to comply with the Special Conditions required the imposition of a monetary penalty and proposed that the amount of that penalty should be £50,000. The Notice of Intention explained that the Panel had not found it necessary to make decisions on a further 5 allegations which had been made, because those matters would not have any impact on the outcome in the case.

27. In the representations, QFI submitted that in relation to the decision to leave allegations 3 to 8 on file:

It is noted that Ofqual has considered that it is not in the public interest to consider these allegations at this time. In doing so the Panel has therefore excluded from its deliberations any evidence or representations in connection with such allegations which are in mitigation of QFI’s position. QFI considers, therefore, that by only considering the first 2 allegations and not taking into account all matters the Panel’s decision may be flawed. The decision is based entirely on the technical question of whether a number of Learners was exceeded and fails to take account of the full operation of QFI’s business and the level of services which were provided and maintained.

As noted above QFI believes it did not breach the Special Conditions, but if it did (which is denied) the levels of service and the Standards it maintained within its own business should have been taken into account as mitigating factors either to avoid or substantially reduce any monetary penalty.

QFI would acknowledge that a monetary penalty would be appropriate if it were shown that its actions prejudiced Learners, but no such evidence has been provided – and indeed there is no allegation that this occurred. The monetary penalty has been imposed although there is no complaint upheld regarding the quality of services provided by QFI or any complaint by a recipient of such services.

As you are aware, QFI has already surrendered recognition. That was not, however, due to any belief on the part of QFI that it was not in a position to fulfil its obligations for current learners, but due to the fact that given the additional conditions which Ofqual proposed upon QFI it was impossible for QFI to meet the needs of the providers of courses. Conditions proposed by Ofqual required QFI to obtain Ofqual’s consent to take on any additional Learners and course providers could not appoint QFI to provide services where each individual Learner then required the approval of Ofqual.

In such circumstances the directors of QFI had no alternative but to confirm that no further Learners would be accepted by QFI but it was ensured that there was an orderly wind down of the process so that all Learners already registered with QFI properly completed their qualification. This was done despite it being unprofitable for QFI to do so.

Given all of the above, it is considered that the imposition of a Monetary Penalty is inappropriate and excessive. Further, as QFI has now completely ceased trading, but did wind down its business in a way to ensure no Learner was affected, despite this being unprofitable. Further action against QFI will not benefit any party. The scale of the fine cannot be justified as a proportionate response to the concerns and the limited impact of the breach on Learners.

Enforcement Panel’s consideration

28. Although the Panel did not think it was necessary to make determinations in respect of allegations 3 to 8, it nonetheless considered all of the evidence and argument presented, including all of the representations made by QFI through the enforcement proceedings.

29. Paragraphs 24 to 29 of the Notice of Intention set out the Panel’s considerations when it made its initial decision that a monetary penalty should be imposed and that the appropriate amount was £50,000.

30. The Panel has considered each of the factors now raised by QFI in turn, below.

Levels of Service

31. In summary, QFI submits that the levels of service and the standards it maintained within its own business should have been taken into account and if properly considered, would either negate the requirement for a monetary penalty or substantially reduce the amount of any monetary penalty imposed.

32. The Panel considers that, to the extent that the matters relied on by QFI are relevant, those matters were taken into account when it made its initial decision. In particular, at paragraph 26.3 of the Notice of Intention, the Panel expressly noted that QFI had a good compliance history – there was no evidence of previous non-compliance - and that no evidence had been adduced of recorded complaints to Ofqual about the service provided by QFI to Learners. However, for the reasons set out at paragraph 26.3.2 of the Notice, the Panel considered the weight to be given to this mitigating factor was limited.

33. Having considered the representations, the Panel is satisfied that it appropriately took this factor into account when issuing the notice of intention.

Impact on Learners

34. In summary, QFI submits that Ofqual should not impose a monetary penalty because there was no evidence that its actions had prejudiced Learners, there was no allegation of such prejudice and that no complaint has been upheld either by QFI or Ofqual regarding the quality of services provided by QFI, whether or not those services were provided outside the limits imposed by the special conditions.

35. The Panel does not agree with the underlying contention that monetary penalties are reserved for cases where it is shown that Learners have been prejudiced by a breach. Ofqual’s Taking Regulatory Action policy sets out a number of non-exhaustive factors for the Panel to consider (see paragraph 24.1) which make clear that evidence of prejudice to Learners is only one relevant factor.

36. At paragraph 24.2 of the Notice of Intention, the Panel set out the reasons why, based on the facts of this case, it considered a monetary penalty is appropriate.

37. At paragraphs 25.6 and 25.7, the Panel considered whether QFI’s actions prejudiced learners (that is, the harm caused) and explained why it considered a significant monetary penalty was warranted in this case notwithstanding the lack of evidence of a direct impact on Learners.

38. In particular, at paragraphs 24.2(f) of the Notice of Intention, the Panel cited the particular relevance of Special Conditions which are imposed at the time of recognition in connection with the need to act so as to deter awarding organisations from similar non-compliance in the future.

39. One of Ofqual’s statutory objectives is to promote public confidence in regulated qualifications (section 128(4) of the Act) and Ofqual’s Taking Regulatory Action (TRA) policy notes (at page 6) that in line with the Better Regulation Executive’s 5 principles of good regulation, our assessment of risk to public confidence is one of the ways in which we target our regulatory activities and, in particular, we “promote public confidence in qualifications through visible, appropriate and effective regulatory action”.

40. It is important to note that Ofqual takes enforcement action so that (a) awarding organisations know what the requirements are and (b) know that Ofqual is prepared to fine when those requirements are not followed.

41. The Panel considers that awarding organisations should anticipate significant regulatory action where the Ofqual finds that an awarding organisation either wilfully or negligently breaches a Special Condition which, as here, was put in place due to concerns about the awarding organisation’s capacity at the time of recognition.  A decision to recognise an awarding organisation with Special Conditions reflects the identification by Ofqual of a level of risk which exists at the time of recognition which the Special Conditions are intended to manage. Robust enforcement of such conditions is essential if Ofqual is to continue to recognise awarding organisations where such risks exist and, crucially, if it is to maintain the confidence of users of qualifications in those decisions.

42. In summary, having reviewed the representations, the Panel is satisfied that it appropriately considered this factor when making its initial decisions, as set out in the Notice of Intention.

Surrender and orderly wind down

  1. 43. In summary, QFI submits that the Panel should either impose no penalty, or reduce the amount of the penalty because:

    1. 43.1. QFI has surrendered its Ofqual recognition,
    2. 43.2. the surrender was prompted by Ofqual’s proposal to impose additional Special Conditions, which would have made it impossible for QFI to meet the needs of the providers of courses,
    3. 43.3. QFI wound down its business in an orderly fashion, minimising the impact on learners, notwithstanding that it was unprofitable to do so.

44. QFI emphasises that the decision to wind down QFI was not due to any belief on the part of QFI that it was not in a position to fulfil its obligations for current learners, but reflected the impact of the proposed Special Conditions.

45. The Panel understands that QFI is referring to Special Conditions which were proposed when Ofqual issued the investigation report to QFI in draft. The Panel notes that QFI was given the opportunity to make representations in respect of the proposal to impose the additional conditions and that in fact no additional conditions were imposed.

46. The Panel notes that QFI decided to surrender its recognition, which was of course a decision for QFI. Having taken that decision, QFI remained regulated and was therefore required to continue to comply with its Conditions of Recognition until the surrender date, which is set by Ofqual following consideration of relevant factors. It follows that rather than a mitigating factor, QFI’s decision to withdraw its qualifications in an orderly fashion and to protect the interests of Learners whilst it did so merely reflected its ongoing obligations as an awarding organisation – in particular General Condition D6.2, which requires that where an awarding organisation intends to withdraw a qualification, it must take all reasonable steps to protect the interests of Learners in relation to that qualification. It follows that any costs associated with ensuring an orderly surrender are necessary costs of compliance. Had QFI not ensured an orderly surrender it would have failed to comply this and other Conditions, which may have resulted in an increased penalty.

47. The Panel previously considered the issue of the surrender, at paragraph 24.a of the Notice of Intention, setting out why, it considered it inappropriate to take this factor into account in this case. For those reasons, and in light of the elaboration set out in this notice, the Panel considers that it is not appropriate to reduce the amount of the penalty. Ofqual’s fining power would be less of a deterrent if awarding organisations believed they could operate in a non-compliant manner and then surrender recognition to avoid, or secure a reduction in, a monetary penalty.

48. Having reviewed the representations, the Panel is satisfied that it appropriately considered this factor when making its initial decisions which were set out in the Notice of Intention.

Final Decision

49. For the reasons set out in the Notice of Intention to impose a Monetary Penalty dated 1 October 2024, and following consideration of QFI’s representations dated 28 October 2024 as set out in this notice, the Enforcement Panel has decided that QFI will be required to pay a Monetary Penalty in the sum of £50,000 due to its failure to comply with the Special Conditions.

Payment

50. QFI must pay the Monetary Penalty within 28 days of the date of this Notice, in accordance with the Payment Instructions provided with this Notice.

51. In the event of non-payment, interest may be charged and the outstanding amount may be recovered as a debt, in accordance with section 151D of the Act.

Appeals

52. QFI may appeal to the First Tier Tribunal in respect of Ofqual’s decision to impose the Monetary Penalty and / or in respect of the amount of that penalty, in accordance with section 151C of the Act.

  1. 53. An appeal may be made on the grounds that:

    1. a) The decision was based on an error of fact;
    2. b) The decision was wrong in law;
    3. c) The decision was unreasonable.

54. Any appeal must be made within 28 days of the date of this Notice. Further information is available from HM Courts and Tribunals Service at: https://www.gov.uk/guidance/exam-boards-appeal-to-a-tribunal-against-a-monetary-penalty.

Name: Chris Paterson

Chair of the Enforcement Panel

Date: 27 January 2025

Enforcement Panel:

  • Chris Paterson
  • Hardip Begol CBE
  • Clare Pelham – Clare Pelham was unable to attend the meeting of the Panel on 6 December 2024. The Chair of the Panel determined that the meeting was nonetheless quorate. The 2 members present agreed each of the final decisions set out in this notice.
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