Training providers: proposed ban on enrolment inducements a welcome step says consumer advocate

Victorian consumer organisation Consumer Action has welcomed an announcement from Assistant Minister for Education and Training Simon Birmingham this morning about reforms designed to crack down on dubious marketing practices by training providers and brokers, but says more needs to be done to clean up the industry.

The new measures will include a ban on training providers from offering inducements for enrolments, such as cash, meals, prizes and laptops. Training providers will also be required to conduct tougher assessments of students’ educational capabilities and be prevented from levying all course fees in a single transaction up front.

3590583847_40d4132bc7Consumer Action raised concerns about the marketing practices of private training providers and brokers in its recent submission to the Senate Inquiry into the operation, regulation and funding of private vocational education and training providers in Australia, after receiving a significant number of complaints about the issue.

‘We need to see a ban on enrolments over the phone and on doorsteps, not just a ban on inducements. We have received reports of cold calling and door-to-door sales by education brokers and sub-contractors, where high pressure sales tactics have been used to convince potential students to sign up for courses on the spot that can cost over $20,000,’ said Gerard Brody, CEO of Consumer Action.

‘This just isn’t the appropriate sales channel for such a significant purchase. Signing up to a course like this isn’t like joining the gym. It should be about vocational and educational needs, not a quick sale on your doorstep or an impulse buy over the phone. It is a life decision and brings with it long term financial obligations to pay back the fee support.’

Mr Brody queried why stronger consumer protections were not introduced before the deregulation of the vocational education sector. ‘The problems we see with training providers and brokers goes to the broader issue of how we deregulate public services.  Rather than introduce contestability and expect the free market to sort it out, we must build in consumer protections so that people are able to make informed and effective choices. Commissions being paid to sales people and “course advisers” for sign-ups inhibit consumers from making free and informed choices, away from sales pressure.’

Mr Brody also said that it is difficult for students to resolve disputes with training providers or brokers, ‘Complaints are often unable to be resolved internally, meaning domestic students in Victoria must take their dispute to the Victorian Civil and Administrative Tribunal. This adversarial process can be intimidating, expensive and time consuming for students.

‘We need an ombudsman to assist students to resolve disputes with training providers, common in other industries such as energy, telecommunications and financial services. Students should have access to a free and independent dispute resolution service. The ombudsman process is informal and can also create incentives for providers to settle disputes internally.’

Photo Credit: rkleine via Compfight cc

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