No doubt many of you would have already been informed about the changes to third-party arrangements (click). From my perspective, this is one of the most significant changes to the VET landscape since the introduction of the National VET Regulator. There are many businesses out there at the moment who are trying to come to terms with the change of this new policy as it will completely disrupt their business.

We have had a number of phone calls already with the national regulator trying to interpret the language within the fact sheet and the general direction. I have also sent a written enquiry to seek clarification on the definition of the word “offer”. In my discussion with the national regulator and in our own reading, there is a fair bit of ambiguity around what is allowed and what is not allowed in regard to marketing. I hope to provide further advice in this in the coming weeks.

There are now only a very limited number of ways that a third-party arrangement can exist. These include:

1. Where the third-party (who is not an RTO) is delivering services on behalf of the RTO and is not marketing its services under its own brand in any way (this is where we are seeking clarification). A franchise situation is a classic example. So, if this describes your situation, you will need to cease any current marketing under your own branding no later than 1 November 2019.
2. Where the third-party (who is an RTO) is delivering services on behalf of the RTO and both organisations have the relevant training products on their scope of registration. Seriously, I have seen maybe one example of this in 20 years. It would be a very rare circumstance.

Essentially, that’s it. What effect will this have on the training industry? It is a question that I have been pondering for the last week. Back on 4 May 2018, I sent ASQA a series of emails highlighting my concerns about the consequences of their “raising the bar strategy” to restrict the registration of new RTOs. Broadly, I am actually in support of the strategy but the blunt way in which it was introduced has had consequences. I predicted that we would see an explosion in third-party arrangements and the administrative appeals tribunal would be choked with appeals resulting from the regulators punitive approach to bypassing the option of rectification and utilising the administrative appeals tribunal as one of its own regulatory mechanisms. I am sad to say that both of my predictions came true. My prediction now is that, we will see a flood of applications for initial registration come in over the next 6 to 12 months. These are businesses that have been displaced by the new third-party arrangements policy and have no other choice other than registering as an RTO. No doubt, this will lead to greater congestion in the administrative appeals tribunal unless the regulator buckles to the current pressure that it is under to clean-up the backlog in the AAT.

Talk about mixed messages! I wonder if they actually sit down and strategically plan this stuff? The other observation I would make about this new policy is the absolute blunt way in which it has been implemented. The fact is, there are some excellent third-party providers supporting their local communities. These guys along with all of the bad apples have been totally disrupted. So much for a risk-based approach! On the upside, the displacement of the third-party sector could have positive outcomes for existing RTOs with the removal of this competition. This could result in potentially a larger slice of the market and slightly higher fees due to the lack of competition. That will certainly be something I will watch with interest. Will keep you up to date.

Good training,

Joe Newbery

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