VET-FEE-HELP is a government loans scheme, similar to HECS, where students undertaking training courses with Registered Training Organisations (RTOs) can borrow up to $96,000 to complete VET courses. Repayments are contingent upon earning over the $53,000 income threshold. However, the VET-FEE-HELP bill is indexed to the inflation rate and remains an enduring liability for students.
The Australian Skills Quality Authority, the federal regulator for RTOs, recently released its report into the marketing and advertising practices of Australia’s registered training organisations.
The report found that nearly half of all RTOs used misleading information to promote themselves. It stated “consumers, including students and employers [were] often provided with ambiguous and/or insufficient information to make informed training choices.”
Redfern Legal Centre’s Credit and Debt practice has assisted a number of clients with complaints about the misleading and deceptive practices of some marketing agents and brokers acting on behalf of RTOs.
RLC is concerned that vulnerable and disadvantaged consumers are targeted and signed up to inappropriate courses due to misleading claims about ‘no upfront fees’ and without proper disclosures about the extent of VET-FEE-HELP liability.
RLC has heard anecdotal stories of marketing agents positioning themselves outside Centrelink offices and going door-to-door in public housing blocks. Marketing tactics include inducements of guaranteed pass rates, lucrative job outcomes and free laptops and tablets – sweeteners that are misleading at best and at worst, patently false.
Jonathon’s story
Jonathon (not his real name) lives in public housing in Surry Hills. He suffers from acute mental illness, including schizophrenia and trauma-related issues. His sole source of income is the Centrelink Disability Support Pension.
In early 2014 a door-to-door sales agent, acting on behalf of an RTO, approached Jonathon at his unit in Surry Hills. The agent told Jonathon that he would receive a free laptop and tablet if he signed up for a couple of “free” VET courses, with no “upfront fees”.
Jonathon did not understand the terms and conditions he was agreeing to, but felt coerced to sign the forms presented to him. He was enrolled in two courses with two separate RTOs.
A few months later, Jonathon found out he was liable for course fees. Furthermore, he was unable to withdraw from the course as the census date for disenrollment had passed without his knowledge.
RLC contacted the RTO and outlined our concerns about the practices of the RTO’s marketing agent. We noted that failures to make appropriate disclosures to Jonathon, concerning his fee liability and information relating to census dates, breached the ASQA Standards for RTOs.
RLC also alleged the sales agent’s conduct amounted to misleading and deceptive conduct, false and misleading representations and unconscionable conduct in breach of the Australian Consumer Law, and that the RTO would be held vicariously liable for the conduct of its marketing agent.
Within a fortnight, the RTO informed Jonathon it had withdrawn him from the course and remitted his VET-FEE-HELP liability. The RTO also stated they had dismissed their marketing agents and would tighten their contractual arrangements and training for any future marketing agents they would engage in the future.
Jonathon’s story highlights the types of unscrupulous marketing tactics used to target and exploit vulnerable consumers. Unfortunately, Jonathon’s case is far from uncommon.
The Senate Standing Committee on Education and Employment has now established an inquiry on the ‘Operation, regulation and funding of private vocational and education training (VET) providers in Australia’. RLC wrote a submission to this inquiry. Amongst RLC’s concerns and recommendations to the inquiry, was that:
- There is considerable disparity in regulations governing the behaviour of RTOs, and their non-RTO marketing agents. The regulatory powers under the National Vocational Education and Training Regulator Act 2011 and ASQA ‘National Standards’ have little application to non-RTO marketing agents. There is significant difficulty in enforcing Australian Consumer Law against non-RTO marketing agents.
- There is a significant lack of transparency, about agency relationships and commission-based sales agreements, between RTOs and their marketing agents. The consumer is unable to distinguish between a genuine representative of an RTO and their marketing agents.
- We recommend the mandatory provision of a simple two page ‘critical information summary’ (similar to those required by Telecommunications providers), as part of the application process for VET courses and VET FEE HELP loans. These critical information summaries should clearly outline the material terms of the course, cooling-off and refund rights, census dates for withdrawal from the course and inform decisions about incurring VET-FEE-HELP liability.
You can read the submission in full here.
