Qualifications Wales: The penalties cap needs to fit

Learners in Wales may face a reduced choice of regulated qualifications if a recent proposal by the Welsh Government is implemented.

The proposal set out in the ‘Qualifications Wales (monetary penalties) Regulations’ consultation suggested a cap on monetary penalties for awarding bodies of 10 percent of annual UK turnover.

The proposal is disproportionate for the vast majority of awarding bodies whose turnover in Wales is a small percentage of their total annual UK turnover.

It may be even more disproportionate where an awarding body operates as just part of a much larger organisation (which may be not-for-profit or a charity) where most of its turnover is generated outside of Wales.

Awarding bodies dedicate significant resources to ensure they comply with the regulatory requirements in Wales. For most, a monetary penalty will never become a reality but it is a risk that needs careful consideration, nonetheless.

Withdrawal from the market

The proposed monetary penalty cap, based on annual UK turnover, may well lead awarding bodies to reconsider their future involvement in the regulated qualifications market in Wales.

Withdrawal from the market will not be a decision that any awarding body takes lightly. Offering learners a choice of high-quality, regulated, vocational and technical qualifications is important.

It allows learners to select the most appropriate option to suit their needs and support their progression into further study and employment, both inside and outside of Wales.

But, faced with the risk of disproportionate monetary penalties some awarding bodies may have to make the difficult but necessary decision to withdraw their regulated qualifications offer in Wales.

Double Jeopardy

Another important issue highlighted by our analysis of the proposal is the potential for a ‘double jeopardy’ situation where something goes wrong and impacts on both sides of the border.

There was no assurance provided that Qualifications Wales and Ofqual, the qualifications regulator in England, would co-ordinate their work to avoid a situation where they both impose a monetary penalty in relation to the same case.

Ofqual also has the powers to impose a monetary penalty of up to 10 percent of annual turnover. This could result in a double penalty of up to 20% of turnover. This potential ‘double-whammy’ is a serious consideration for the risk register of any organisation.

The icing on the penalties cake

And if the potential double jeopardy situation was not enough, both Ofqual and Qualifications Wales also have the power to recover costs associated with their investigations. This adds significantly to the level of financial risk for awarding bodies.

It is not surprising, when you add all of these financial risks together, that awarding bodies are likely to review their regulated activity in Wales. The positives of regulation may well be outweighed by the risk of monetary penalties, especially in relation to qualifications that are currently regulated, but not funded in Wales.

The need for proportionate monetary penalties

Having a cap on monetary penalties is important. Awarding bodies must be clear about the extent of the financial risk they face, if things go wrong. It is equally important that the cap is fair and does not present an undue level risk to the regulated community.

In the Federation’s response to the proposal, we highlighted the need for a more proportionate approach to penalties, based on regulated qualifications turnover within Wales.

All regulated awarding bodies, operating in Wales, regularly provide qualifications data which could offer a useful starting point for calculations in penalty situations. This is worth further consideration in the pursuit of a proportionate monetary penalty approach.

We understand how useful it is for the regulators to have monetary penalties in their regulatory toolbox and how they can use this tool to contribute to public confidence in the regulated qualifications system.

It is vital though that the extent of this power is proportionate and that it operates within the boundaries of the market over which the regulator has jurisdiction.

Ailin O’Cathain is the Head of Policy for the Federation of Awarding Bodies, the trade association for vocational/technical awarding bodies

About the Federation of Awarding Bodies (FAB): The trade association for vocational assessment and awarding organisations, the Federation has 122 full members, ranging from the large awarding organisations through to smaller, sector specific awarding organisations. Membership includes many chartered institutes and professional bodies. 

Qualifications Wales is the independent organisation responsible for regulating general and vocational qualifications in Wales.

The Office of Qualifications and Examinations Regulation (Ofqual) regulates qualifications, examinations and assessments in England.

The power to impose monetary penalties is provided to Qualifications Wales in section 38 of the Qualifications Wales Act 2015.

The power to impose monetary penalties is provided to Ofqual in section 151A of the Apprenticeships, Skills, Children and Learning Act 2009.

The Welsh Government consultation ‘Qualifications Wales (monetary penalties) Regulations closed on 07 January 2019.