Australia’s competition watchdog has widened its action against the recruiting practices of private training colleges, confirming it is about to launch legal proceedings targeting a second institution.
The regulator’s action is sparked by growing concerns about vulnerable students incurring government debts after being persuaded to sign up to vocational education and training (VET) courses for which they are ill-suited.
The Australian Careers Network, which has remained in a share trading halt since mid-October, notified the stock exchange of the planned action by the Australian Competition and Consumer Commission. The proceedings in the federal court will target one of the company’s subsidiaries, the Melbourne-based Phoenix Institute.
An ACCC spokeswoman said proceedings would begin “shortly” and she was unable to disclose the specific allegations at this stage.
“The ACCC’s action is part of a broader investigation into a number of colleges and their agents following complaints about behaviour in the training and education sector that affects consumers, particularly the vulnerable,” she said.
“This is in conjunction with NSW Fair Trading and with assistance from other agencies.”
Last month, the ACCC launched legal action against the Sydney-based Unique International College, accusing it of “unconscionable conduct” including targeting vulnerable and illiterate people with offers of free laptop computers if they signed up to diploma courses.
At the time, the ACCC chairman, Rod Sims, told Guardian Australia at least two other operators could face similar action before the end of the year.
The ACCC’s decision is the latest blow to the Phoenix Institute, which also faces the cancellation of its licence to operate as a registered training organisation and the suspension of its ability to receive the government’s VET Fee-Help funds.
The parent company, the Australian Careers Network, said it was yet to hear back from the federal Department of Education and the Australian Skills Quality Authority about the outcome of those earlier notices, and requested an extension of its share trading halt.
In September the government vowed to act on “deeply disturbing” allegations about Phoenix Institute and a broker.
Fairfax Media reported allegations a couple with intellectual disabilities was door-knocked by a salesman representing the Phoenix Institute and offered a free laptop and a free qualification. He allegedly helped the couple with the literacy and numeracy test. It is unknown whether these allegations will form part of the ACCC’s formal statement of claim.
The cases follow growing calls for governments and regulators to crack down on high-pressure marketing tactics deployed by some operators to enrol students in courses for which they may not be suited.
In October, a Senate report prepared by a Labor and Greens-dominated committee argued easy access to the VET Fee-Help loans had left students and taxpayers as “the victims of a provider-led feeding frenzy”.
The number of students accessing VET Fee-Help rose from 55,115 in 2012 to 202,776 in 2014, according to government figures, while the total value of loans increased from $325m to $1.76bn in the same period.
The federal minister for vocational education and skills, Luke Hartsuyker, has introduced a bill to parliament to clamp down on VET providers, including a cooling-off period for loans and fines for unscrupulous operators.
The legislation would also require providers to check literacy and numeracy skills before students start diplomas for which commonwealth loans are available.
The Coalition has generally blamed the former Labor government for problems in the design of VET Fee-Help. Labor has conceded there were “unintended consequences” from opening up the loan scheme but accused the Coalition of being too slow to act on growing concerns about the rapid rise by “shonky providers”.
