Private Vocational Education: Business models, marketing practices and
Unscrupulous marketing techniques employed by private providers
Few issues in the VET sector attracted as much community concern as the conduct
of providers marketing their courses to potential students. The committee
received a swathe of evidence from students, staff and advocates that high
pressure sales pitches aimed at securing students involved practices such as
promises of equipment, downplaying the level of debt the students would incur
and providing deceptive impressions of the qualifications to be earned or
employment opportunities which would follow. These will be discussed more fully
in this chapter.
Concern about marketing and advertising practice of private RTOs in
Australia's VET sector is entrenched. In 2013, ASQA undertook a review of the
marketing and advertising practices of RTOs in Australia's VET sector, prompted
by what they described as:
serious and persistent concerns raised within the training
sector about registered training organisations and other bodies providing
misleading information in the marketing and advertising of training services.
This review found that 45.4% of RTOs investigated could be demonstrated
to have breached the national RTO standards and/or consumer and fair trading
legislation, ranging from:
relatively minor concerns that can and should be rectified
quickly and easily, to more serious breaches that could involve major sanctions
being applied, including a loss of the RTO’s registration.
Specific breaches of the standards found in ASQA's review of marketing
practices amongst RTOs examined in this review included:
53.9% marketed qualifications in 'unrealistically short time
frames or time frames that fell short of the volume of learning requirements of
the Australian Qualifications Framework';
32.3% had websites which enabled the collection of tuition fees
in advance; half of a sample of these websites allowed RTOs to collect fees in
excess of the amount allowed by the national standards and 60% did not mention
the RTO's refund policy;
11.8% advertised superseded qualifications; and
8.6% engaged in 'potentially misleading or deceptive advertising such
as guaranteeing a qualification from undertaking their training irrespective of
the outcomes of assessment and guaranteeing a job outcome from undertaking
training even though an RTO is in no position to ensure someone will get a job
as a result of their training'.
Notwithstanding reforms introduced since the commencement of this
inquiry, marketing practices in the private VET sector remains a key issue for
students, staff and advocates.
Throughout the inquiry, the committee received evidence about specific
strategies commonly used by private RTOs in marketing courses to potential
Marketing of courses as 'free' or 'government-funded';
Promises of free equipment; and
High-pressure marketing techniques and targeting of disadvantaged
In addition to these, the committee received
evidence about practices such as door-to-door sales, and is aware of
practices such as television advertising and cold-calling. The committee also
notes the practice of promising a certain income or qualifications. Each will
be outlined in this chapter.
The committee has first considered why this has emerged. Much of this
has to do with the emergence of demand driven student loan schemes like VET
FEE-HELP which have been misused mercilessly by some players in the industry.
The design, and flaws in VET FEE-HELP were covered in chapter 2.
Unsustainable and unscrupulous? The private vocational
education business model
The introduction of entitlement demand driven funding programs has
created an unprecedented environment in the vocational education sector.
As noted in chapter 2, the poor design of state based contestable
funding regimes and the VET FEE-HELP program has led to a situation where
students and taxpayers are the victims of a provider-led feeding frenzy.
Public providers, not for profit providers, and small, quality for
profit providers have lost market share. For profit providers have – in order
to maintain profitability and market share against rivals –pursued
opportunities in government funded markets where volume of enrolments, rather
than quality or outcomes has become the determinant for funding, revenue and
A number of media reports in recent times have described the business
model that has arisen through allowing more open access by private providers to
Commonwealth and state government programs. At the Commonwealth level these
have been VET FEE-HELP and the Tools for Trade programs.
In September 2015, The Age and Sydney Morning Herald
published articles outlining the business model in the vocational education
Chapter 5 will deal with issues of regulation, but reports that only 6
or 7 percent of applications to become a RTO have been rejected by ASQA raises
the question of whether the bar has been set too low.
VET FEE-HELP has seen the evolution of a business model that is
described as such by Michael Bachelard, writing in The Age:
The industry, by design, is "demand driven". But
it's colleges, not students, driving the demand. They employ an army of
salesmen (known euphemistically as "brokers") who earn millions in profits
from taxpayer subsidies.
The dodgy brokers, such as some of those working for
Melbourne's Phoenix Institute, specifically target people living in public
housing, the intellectually disabled, the drug addicted and non-English
They offer a free laptop as an incentive to get the signature
of a new "student", then fill out the literacy and numeracy test
themselves (or coach the client through it).
Image from 'Vocational
education, the biggest get-rich quick scheme in Australia', The Sydney Morning
Herald, 16 September 2015, http://www.smh.com.au/national/vocational-education-the-biggest-getrich-quick-scheme-in-australia-20150916-gjnqwe.html,accessed
7 October 2015 and reproduced with the kind permission of Fairfax Media.
The picture painted is one of problems at the
margin of the private vocational education sector. According to Mr Rod Camm,
I certainly believe that there are
quality issues, but they are at the margins of the industry. If you look at
numbers of providers, the majority are delivering a quality product and are
doing the right thing. But that is not to say that there have been no problems.
It is on the public record that there have been major problems.
Media reports, which highlight the
activities of brokers who almost exclusively come from multicultural
backgrounds, serve to reinforce the impression of problems that exist at only
at the margins of the industry.
But such has been the scale of change
in the private vocational education industry in recent years, can it be
accurately said that the companies that benefit from an exploitative business
model are now a small part of the industry?
change and the rise and fall of education stocks
One major feature in the private
vocational education sector has been the scale of growth and change in recent
years. According to the submission by the Australian Education Union:
The remarkable expansion of the VET
“market” has taken place very quickly. Between 2008 and 2013, expenditure on
payments to non-TAFE (private) providers increased by $839.4 million, or 160
At the Melbourne hearings on 2
September, Ms Pat Forward, Federal TAFE Secretary and Deputy Federal Secretary
of the AEU, advised the committee of updated figures showing the scale of
change in the sector:
So the market share, if you like, of
TAFE nationally in 2014 was 52 per cent down from 75 per cent in 2007. Private
provider share of government funded students has increased to 40 per cent up
from 15 per cent in 2007. This basically means that TAFE is perilously close
now to falling below 50 per cent of share nationally, but it also highlights
the rapid shift in the market and the unprecedented rates of growth in the
private sector. Private market share has increased by 159 per cent since 2007
and by 248 per cent since 2003...
In three states in Australia TAFE
market share has dropped below 50 per cent and in two of those states TAFE is
now a minority provider.
This is in spite of declined spending
on vocational education – both public and private - as a sector,
Vocational education continues to be
the worst funded education sector with funding declining by 26 per cent since
2003. A recently released report by the Mitchell Institute confirms that VET is
surely the poor cousin of education sectors with spending on schools and higher
education far outstripping spending on vocational education and training
according to the authors of Expenditure on education and training in
Sector wide growth rates have been
mirrored by individual companies. Mr Patrick McKendry revealed that his
company, Careers Australia, had grown significantly in just four years - from
5,000 students in 2011 to 20,000 students in 2015:
Senator KIM CARR: That is an
extraordinary growth rate. Tell me where else does that occur in the education
system—a growth rate of what appears to be 400 per cent?
Mr McKendry: I am not sure it is something that is exclusive to Careers
Australia, I just do not know what the growth rates of other organisations have
These figures are extraordinarily similar
to that of publicly listed company, Australian Careers Network. Its June 30
financial report boasted that its student numbers had increased by 417 per cent
from 4990 students in 2014 to 25,784 students in 2015, with an "average
revenue yield per student" of $3,303.
Figures for VET FEE-HELP payments show that
the growth in payments for some private companies has been dramatic. Careers
Australia has had payments increase from $3.539 million in 2011 to $108.172
million in 2014. Evocca College, trading as ACTE Pty Ltd grew from $1.831
million in 2011, to $24.958 million in 2012, to $131.25m in 2014.
The business model employed by these providers
sees average fees charged to students – through VET FEE HELP – at
extraordinarily high levels. For example, while in 2013 the average VET
FEE-HELP loan was $10,621,
the average tuition fee at Careers Australia was reported to be $18,276 in
2013. At Evocca College, it was $16,878 in 2013.
By comparison, a student studying at a public university is liable for a
loan of between $6,152 and $10,266 in 2015.
The committee heard evidence that some private
providers are making high profit margins on students and the Commonwealth. The
Workplace Relations Centre estimates that in 2013 Earnings Before Interest and
Tax (EBIT) margins were between 21 percent (for Vocation Limited) and 51
percent (for Australia Careers Network).
Mr McKendry of Careers Australia revealed that
on average the profit margin of that company was 20 percent:
We generally operate and have operated
on the basis of about a 20 per cent margin across our business. We do not get
there all the time, but generally we believe that 20 per cent represents a fair
profit that enables us to keep reinvesting in the business.
These companies also have an extraordinary dependence on revenue from
government sources. Mr McKendry of Careers Australia revealed the high dependence
of his business on government revenue:
Senator KIM CARR: How much of
your revenue actually comes from government sources?
Mr McKendry: It would have to be over 80 per cent. If I exclude
fee-for-service and international student income across the five or six states
and the federal government, it would be around 80 per cent.
The annual report of Australian Careers Network also shows a high level
of dependency on government funding:
A significant proportion of the Company’s revenue is derived
from Government funding sources, including grant or subsidy programs.
The Workplace Research Centre has estimated that up to 95 per cent of
revenue of the larger private providers may be dependent upon government
This amounts to an extraordinary level of risk for investors to change in
government and policy settings in education more generally, and vocational
education more generally.
This has been demonstrated recently by two examples. One, the
extraordinary decline in the value of Vocation Limited following well
publicised regulatory issues in Victoria. Vocation’s share price which was $3
in early September 2014 fell to a low of 8c in September 2015.
Another example of the damage that can be caused by exposure of poor
behaviour relates to ASX listed company Australian Careers Network (ACN). In
early September 2015 Fairfax media reported allegations of bad practices at
Phoenix Institute, owned by Australian Careers Network. Following these reports
ACN suffered a fall in its share price of 12 per cent.
Ashley Services has suffered a similar fate after the cessation of the
Commonwealth Tools for Trade program following the 2014-2015 Budget. Ashley
listed on the Australian Securities Exchange in August 2014, after an initial
public offering priced at $1.66 a share. Following the latest profit downgrade,
the company’s share price fell to 38c, and is subject to a class action
As will be discussed later in this chapter and in this report, the
ownership structures of larger providers is opaque, the persons responsible for
the businesses is unclear and subcontracting arrangements further clouds
It is hard to escape the conclusion that amongst larger private
providers, and indeed in some brokers, extraordinary profits are being made at
the expense of the taxpayer, and at the expense of students these providers
claim to be assisting. Such activities have heavily damaged the reputation of
the vocational education sector as a whole, and if left unchecked, could affect
Australia’s international education industry through reputational damage.
Misleading marketing of courses as
'free' or 'government-funded'
A number of submitters and witnesses raised concerns about the prominent
marketing of courses which attract VET-FEE-HELP support as being 'free' or 'government-funded'.
Such language may serve to hide from students the fact that they are in reality
signing up for large loans from the government, with the expectation that these
loans will be repaid.
In addition, if students are unable to repay the loan because their
income never crosses the repayment threshold, they may have a debt against them
for the rest of their life. Once this consequence becomes clear to those
unaware when they signed up for the loan, the knowledge of it may also result
in a psychological burden on those already living with a limited income.
The Consumer Action Law Centre expressed concerns about this marketing
'study now pay later' slogans that
fail to highlight the actual cost of study, and marketing VET FEE-HELP loans to
students who are unlikely to be able to repay their loans. These sorts of
slogans draw upon behavioural biases such as myopia and over-confidence, and
are more likely to result in students enrolling in courses that are
inappropriate to their needs.
Several witnesses noted that the nature of the loan is further obscured
by the relative ease with which it can be applied for. For example, in its
submission, the Canterbury Bankstown Migrant Interagency explained how easily students
can obtain a VET FEE-HELP loan, without fully understanding the consequences of
what they are doing:
The common denominator is that consumers do not understand
what they are signing up for and are routinely unaware that they have in effect
taken out a loan for tens of thousands of dollars. The process for obtaining
consent and VET-FEE-HELP loans is in stark contrast to the stringent framework
of responsible lending obligations incumbent upon commercial creditors.
Clients have given us permission to see and keep record of
their 'Request for VET FEE-HELP assistance' form. Name, date of the birth and
Tax File Number are the only personal information that is required on the form;
and this very simple form is the ONLY mechanism which a student has to go
through to incur tens of thousands of dollars of VET FEE-HELP debt.
Similarly, ACPET, the national industry association for private VET
providers, registered their concern over the lack of transparency for students applying
for VET Fee-Help loans about the extent of that loan:
On examination of the request for VET FEE HELP assistance
form, it was found that an applicant is not made aware of the VET tuition fees
loan amount they will be committing to as part of the application process.
ACPET recommends that such information should be made clear to the student to
as part of the loan application process to help inform the decision to assume
such a liability.
In other cases, students were explicitly encouraged by the RTO or broker
to think of the loan required to undertake a course as one that they would
never have to repay, as in the following case study presented by the TAFE
An older woman in her early 70s was at the Bankstown Central
shopping centre having lunch with her bible group when they were approached by
a young man asking them if they would like a free laptop and a "free"
Diploma in Community Services. He assured them that though they had to sign up
for a government loan they would never have [to] repay it as they would need to
[earn] over $50,000 (and this was a group of pensioners) and they agreed they would
never be earning that much. The whole group signed up and got their laptops.
Similarly, the Canterbury Bankstown Migrant Interagency reported:
In March 2014, a group of senior citizens from Bankstown (all
from Culturally and Linguistically Diverse background and little English) were
talked into enrolling in 'computer classes' with Unique International College
in Granville and Aspure College in Parramatta. It turned out that there was no
computer class and they were all enrolled in different diploma courses and
filled out forms to take out VET FEE-HELP. They were each offered a free
computer/ipad or $1000 cash by taking out the loan. They were told there no
need to come to class, but if they wish, they could come and free lunch will be
offered. They alleged in Aspire College, they had a canteen that could
accommodate a couple of hundred people and on the day it was packed with senior
citizens enjoying their free lunch.
Providers prominently advertising that their courses are eligible for
VET FEE-HELP access for students is not, in and of itself, misleading. For many
students, VET would not be a viable option if they were not able to access VET
FEE-HELP. However, the ACTU notes that the option of paying late can lead to
students paying more for private a private course:
It is clear the concept of 'train now, pay later' is central
to attracting students – in some cases, to get them to sign up to courses five
times as expensive as the equivalent TAFE course.
It was also argued that the process for students to keep track of their
VET FEE-HELP debt was overly complicated and did not incorporate warnings that
a debt was being accumulated. For example, in their evidence to the committee,
the Redfern Legal Centre noted the pitfalls of such a system, particularly for
those who do not regularly file tax returns.
In response to the committee's question about how students could obtain
information about their debt, the Redfern Legal Centre stated:
They have to make inquiries with the tax office. That is
really the only time that most of our clients will have any engagement with
that sort of information.
It was noted by the committee that a considerable proportion of the
legal centre's clientele would not regularly be submitting a tax return. This
being the case, the Redfern Legal Centre suggested that it could be 'some years
before the full scope of the risk becomes clear'.
The evidence received by the committee regarding the ease with which
some students are trapped into incurring VET FEE-HELP debts by the unscrupulous
practices of some RTOs is a matter of deep concern and suggests that further
strengthening of the regulations under which RTOs operate is a necessary step.
Although banned by the new Standards which came into effect in 2015,
numerous submitters noted the use of inducement-based marketing amongst private
Of particular concern was the practice of offering students 'free' iPads
or laptops upon their enrolment. Notionally provided as a study aid,
these devices featured heavily in some RTO's advertising, and would appear to
have been the deciding factor for some students in choosing to enrol in a
particular course or with a particular provider.
Mr Dwyer, solicitor for the Redfern Legal Centre, explained to the
committee the problem caused by the use of iPads and other such inducements in
private VET providers' marketing practices:
The particular issue of using a laptop or iPad as an
inducement was a critical one because vulnerable people were being told, 'Here
is a free laptop. All you have to do is sign on the dotted line.' They did not
have any understanding of the true cost of that.
Ms Julie Skinner, a former tutor with Evocca College, expressed her
concerns about seeing this technique in practice in the college's marketing,
particularly as it focused on people for whom a 'free' computer or tablet would
be a significant drawcard:
I found the approach taken to recruit and screen students
inappropriate. Promotional stands were set up in shopping centres during
business hours, with iPads being the main promotional tool to attract students.
Disadvantaged, unemployed people appeared to be Evocca’s main target audience.
I’m sure many people signed up because they were delighted to
be getting a “free” iPad when in fact they didn’t really understand they were
signing up for a $20,000 iPad/debt.
In discussing this issue, the Consumer Action Law Centre provided
evidence that it is aware of this practice and suggesting that it is another
marketing technique that helps to mask the fact that a VET FEE-HELP debt will
be incurred by the student:
We are also aware of private VET providers offering
incentives to consumers to study at their institution, for example offering 'free'
laptops or iPads. These incentives tend to detract from the fact that consumers
will incur significant VET FEE-HELP debts following the course census dates.
The committee recognises that a ban on RTOs offering these inducements
was introduced in the 2015 Standards, but notes with concern the evidence
received from the Consumer Action Law Centre which suggested that this practice
has not been stamped out:
We hope these reforms will help to stamp out some of the most
unscrupulous practices that have resulted in complaints to our centre. However,
it is critical that these reforms are actively and publicly enforced by
relevant regulators. We have received a number of complaints about potential
breaches of the new laws including reports of door-to-door salespeople offering
free laptops and tablets. These complaints have been forwarded to the
While the new Standards explicitly forbid inducement-based marketing,
the committee notes that their introduction has not had the effect of
eliminating this behaviour by all RTOs. The committee therefore suggests that
more rigorous enforcement and tighter regulations around RTO marketing
practices are required.
High-pressure marketing techniques
and targeting of disadvantaged students
The committee heard from several witnesses who highlighted the marketing
techniques employed by some RTOs, or brokers on their behalf, which rely on
high-pressure tactics, and which often are targeted at vulnerable customers,
including those with English as a Second Language, Indigenous people, the unemployed
and those on Centrelink payments.
The Redfern Legal Centre recounted their experience dealing with
disadvantaged students, targeted outside Centrelink offices or via door-to-door
selling in public housing blocks:
[W]e have a very vulnerable consumer base. They sometime find
the only way to get a door-to-door salesperson out of the apartment is to agree
to whatever is there. There are hard-sell techniques that encourage people to
sign up. They are told it is free and will not cost them anything. There is
also the instance of people being sold up for things like management courses
when they have absolutely no hope of doing that, and being told they have to do
more than they want to do. They want to do hairdressing and they are signed up
to managing a hairdressing salon. So there is a range of reasons. We have seen
it before in the maths tutoring programs and things like that that were sold
through shopping centres—that kind of technique. People want to engage, they
want to get trained, and they are signed up without any consideration of
whether that person could actually ever do that particular course.
Similarly, the Consumer Action Law Centre expressed their concerns:
We are particularly concerned about VET providers and
education brokers that appear to target vulnerable consumers. These consumers
include Indigenous people, non-English speakers, unemployed people, and people
reliant on Centrelink income. We are deeply concerned about aggressive
marketing tactics that target consumers who do not have the aptitude or ability
to complete VET courses. When offering courses, we have seen providers and
brokers exaggerate the ongoing support available to students and reassure
computer illiterate consumers that they will be able to easily complete a
course online. We have received reports of education brokers in particular cold
calling or door-knocking potential students and pushing them to enrol in
unsuitable courses over the phone or on their doorstep.
The Yarraville Community Centre, working with the Consumer Action Law
Centre, presented evidence to the committee that these tactics had continued to
be utilised by some RTOs even after the new Standards were brought into effect
early in 2015:
One of our largest programs at the centre is English as an
additional language and we have approximately 250 students studying at any one
time across eight different venues across the city of Maribyrnong. We work with
the most vulnerable and disadvantaged in our community.
In late April, one of our volunteers brought staff from the
Health Arts College into the centre during the teabreak and enrolled seven of
our students who were studying certificate I and II in English as an additional
language, which is very low level, into a diploma of business. They were told
to go to a particular chemist in Footscray and to take their passports, visa
and tax file numbers for certification. In one case, a taxi was provided by the
RTO to get there. The students were told the course was free. They were told
they would get an iPad or an iPhone for undertaking the course. Additionally,
they were told that if anyone asked them, to say they had enrolled in a diploma
in March. They attended the first class on Sunday, May 3.
The following week's class was cancelled and then the next
week they were all cold-called and advised they would have a debt. They were
told they would need not to worry about it as they would not have to pay unless
they earned more than $55,000 annually. They all requested to withdraw from the
course after attending one session.
The first time we were aware of this was when the students
came to staff visibly upset and showed us a letter stating that they had a VET
FEE-HELP debt of $13,200. The students all rang to withdraw from the course
between 12 and 18 May. They all received letters on 20 May outlining their debt
and the census date was 14 April, two weeks before they were enrolled. We then
called the community law action centre for advice to see if they were able to
help to get those debts removed and, fortunately, they have taken on the case
for these students. We have many more students who are being contacted by
phone, text, doorknocking and sometimes they are being harassed multiple times
to enrol in inappropriate higher diploma courses.
The committee is particularly concerned that the introduction of new
Standards, designed in part to eliminate these unscrupulous tactics, has not
prevented some RTOs from targeting some of the most disadvantaged people in the
Australian community, as they were no doubt designed to do.
Another section of the community targeted by unscrupulous providers is
that of people with disabilities. Inclusion Australia, an advocacy group for
people with intellectual disability, criticised the approach of those VET
prey on the vulnerability of youth with intellectual
disability to gain access to government VET funding in return for little, if
any, benefit to the student.
Inclusion Australia provided evidence about a specialist disability
provider whose facilities had been targeted by such marketing practices:
We have spruikers for VET outside our building looking to
pick up youth with significant intellectual disability and sign them up for
very expensive and totally unachievable qualifications.
This targeting of young people with disabilities by unscrupulous
providers causes numerous problems, according to Inclusion Australia:
Abuses of training programs including the offer of
inducements to sign up for unnecessary or inappropriate training is rife at the
moment — these waste taxpayers money, saddle people with disability with debt
they will never repay, do not contribute to employment that leads to economic
independence, and tarnishes the reputation of education, training and
Women in Adult and Vocational Education (WAVE) also commented on this
practice, noting the affect it can have on women:
some of the aggressive marketing practices currently adopted
by private providers or their brokers, are targeted at women. For some women
who have not had previous opportunities to study for a career, the enticement
of a Diploma (and maybe the promise of a job) would appear very attractive, especially
if they were led to believe it would cost them nothing and could be achieved
over a matter of months. It is important that this type of marketing is stopped,
given the negative impact it will have on many women.
Adult Learning Australia reported knowledge of private RTOs engaging in
high-pressure, inducement-based or targeted marketing practices in order to
Some of the behaviours reported by our members include:
Sales staff going door to door in public housing estates and spruiking
outside Centrelink offices and in outer suburban shopping malls frequented
by impoverished and socially marginalized people,
Offering impoverished and socially marginalized people iPads,
Coles Myer vouchers and other incentives for enrolment,
Offering cash bonuses to neighbourhood house staff or other community
workers in poor neighbourhoods for each learner they encourage to enrol,
Enrolling early school leavers with low literacy and numeracy
in high level courses with no literacy and numeracy support and limited or no
face to face class time,
Enrolling early school leavers with low literacy and numeracy
in multiple low quality courses.
While not focused on disadvantaged students, the Victorian Automobile
Chamber of Commerce (VACC) reported that it was aware of private RTOs 'falsely
stating to VACC members that a particular qualification must be undertaken for
their trade due to legislative changes'.
A related practice which gained some media attention was the practice of
some RTOs exploiting their links with job search websites to focus recruitment
efforts on the unemployed:
We are particularly concerned about the use of students'
personal information for direct marketing purposes. There have been reports in
the media of education brokers mining personal information from job
advertisements to identify job seekers and potential students. We have received
reports of details being harvested through the broker's own “free” job advertisement
website, without the job hunter's knowledge. It appears that clear and express consent
to use personal information for direct marketing purposes is not always being obtained
before contacting job seekers about courses. Job applicants are cold-called by course
sales representatives and subjected to high pressure sales tactics.
Having received this wealth of evidence suggesting that high-pressure
marketing techniques continue to be used to entice vulnerable sections of the
community, the committee is of the view that it is appropriate to consider
whether steps are required to enforce the Standards.
Misrepresentation of likely
outcomes or qualifications received
Less prevalent a practice than those discussed so far, but worth noting,
is the practice raised by some submitters of potential students receiving
guarantees of employment after the completion of their course, for a specific,
often unrealistic, salary range. Additionally, the practice of potential
students being assured that their graduation from a particular course would
result in the appropriate qualifications to find employment in their chosen
For example, in its submission, Speech Pathology Australia provided
evidence about this kind of marketing practice, noting that they were aware of
providers who used this approach.
At least one provider who is advertising the Certificate IV
in [Allied Health Assistant] course in a manner that implies that students will
be studying 'speech pathology' without any explanation that upon graduate they
will be competent to act as an AHA and will not be a 'speech pathologist'.
This practice was also raised by ASQA in its review of RTO marketing
practices, noting that this type of advertising falls into the category of
'misleading or deceptive marketing and advertising'. Such advertising found by
ASQA in their review of RTO websites included statements such as '100% pass rate
and a guaranteed job'.
It is concerning that students may be investing both time and money into
courses with the expectation of a particular financial and perhaps professional
return, which in reality they are unlikely to achieve. Such a practice may lead
not only to disappointment for students, but also to financial hardship, both
because of the debt incurred and because they may require more training to meet
their professional goals.
The role of brokers
The committee heard evidence about the role of third party marketing and
recruitment agents in recruiting students to the private VET sector, generally
referred to as brokers. The role of brokers is to market various courses or
providers to potential students, referring them to a provider. Brokers are generally
paid on commission for those students who enrol in a course.
While some witnesses described brokers as an inevitable consequence of
the competitive sector, there was considerable agreement about the need for
greater transparency and regulation of brokers to ensure a higher standard of
integrity in recruiting students to the private VET sector.
Mr Martin Powell, Victorian Executive Officer for ACPET, noted both
sides of the issue:
It is a sales force. It is better reach. They are mobilised
to get to parts of the market that providers have struggled with. In that
sense, that is a positive, but of course there needs to be integrity around the
information that potential students are provided with.
This comment acknowledges that third party brokers are valuable to the
sector because they perform the essential sales function that helps private VET
providers meet their student goals and therefore continue to function as a
business. On the other hand, it also acknowledges the need to protect students
from those less scrupulous brokers who may not provide all or correct
information to prospective students.
The tightening of regulations around third-party brokers early in 2015 –
after many of the submissions to this inquiry had been received – was generally
seen as a necessary but not sufficient step in reframing the marketing
practices common in the VET sector.
Making this point, for instance, was Mr William Dwyer of the Redfern
Legal Centre, who commented favourably on the new Standards but noted that a significant
problem still remained:
Currently the standards and the regulations apply exclusively
to RTOs, but it is the conduct of the brokers and the marketing agents which
really leads to this whole mess in the first place. They are the ones with the
incentive to get high volume sales without any real focus on what happens after
that. I think at the moment they are causing a lot of the problems but without
much skin in the game. They can pass the buck and just keep generating their
commercial profits without much care for what happens to the individual
The lack of direct regulation over brokers was also noted by the TAFE
Community Alliance, who expressed their concern that the new Standards
introduced in 2015 apply only to the providers themselves, and not to brokers
working on their behalf:
Whilst ASQA and the Government refer to the new standards
that will more strictly control marketing and advertising, including that RTOs
cannot claim that students will get a job, the same regulations do not appear
to apply to brokers. The growth in the number of brokers, some involved in what
are unethical practices, including door-knocking in the western suburbs of
Sydney to persuade residents to sign up to courses with the enticement of free
iPads and the promise that there are no fees (due to being entitled to VET
FEE-HELP). It is not good enough for private providers to claim that they did
not know what was being claimed by the brokers they used.
Noting this, the Consumer Action Law Centre drew attention to the
unclear responsibility regarding the regulation of brokers in the VET sector
and suggested that ASQA be empowered to act on this front:
It is not clear that ASQA has sufficient mechanisms to
respond to non-compliance by private VET providers and education brokers. As
such, in our view ASQA needs enhanced enforcement powers to ensure that ASQA
can respond swiftly in the event of noncompliance.
ASQA themselves noted in their submission that the new Standards do not
directly regulate the actions of brokers and that further legislation may be
required if ASQA is to be able to address this problem:
While these new requirements go some way to addressing the
current concerns about the operations of brokers, it is not clear that such
measures will, on their own, effectively control unscrupulous brokers.
Significantly, the Assistant Minister for Educational and
Training, Senator the Hon Simon Birmingham, announced on 25 February 2015 that
legislation was being introduced to further crack down on unscrupulous VET
providers and improve training quality. The National Vocational Education and
Training Regulator Amendment Bill 2015 will, amongst other things, require
anyone, including brokers and other third parties, who is marketing a VET
course to clearly identify which RTO is providing the qualification.
Such an amendment to the NVETR Act, combined with the
strengthened new Standards will help respond where poor broker behaviour is
suspected and are welcomed by ASQA.
The committee notes that currently, brokers are not regulated
directly, but only through making providers responsible for the actions of the
brokers they subcontract to. Greater and direct regulation of these agents is
The committee recommends that urgent and concerted efforts are made to
further raise awareness of the rights of students and existing Standards
relating to providers in the VET sector. This effort should focus on advocacy
groups dealing with the most vulnerable members of the community, including the
long-term unemployed or disadvantaged, migrants and people with disabilities.
The committee recommends that the Department of Education and Training
and the Australian Skills Quality Authority conduct a concerted and urgent
blitz of all providers to ensure that they are consistently complying with the
national standards, especially those relating to student recruitment. This
blitz should be aimed at defending the interests of students, enforcing
adherence to AQF volume of learning standards and removing non-compliant RTOs
as VET FEE-HELP providers.
The committee recommends that the government, where there is evidence to
do so, provides a brief to the DPP to launch prosecutions against providers
engaged or benefiting from fraud and take steps to recover monies lost.
The committee recommends that the Australian Skills Quality Authority be
given powers to directly regulate brokers or marketing agents in the VET sector,
and to protect students.
The committee recommends that the government caps or otherwise regulates
the level of brokerage fees paid for VET FEE-HELP students to maximum amount of
15 percent the amount of the loan.
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