Why the CEO is the Biggest Risk in Any RTO
No qualifications required, but the consequences of weak leadership are severe.
Introduction
A common question I get from people considering the registration of an RTO is: “What qualifications do you need to be the CEO of an RTO?” People expect a neat list of qualifications perhaps a business degree, maybe a Certificate IV in Training and Assessment, or some other technical credential. The answer usually surprises them. There are no qualifications required.
The only formal requirement for being the CEO of an RTO is that the person is a fit and proper person under the compliance standards. This test goes deeper than many people realise. It is not just about having no relevant criminal convictions or being solvent. The regulator may consider a person’s management history, financial record, and whether they have previously been involved with organisations that had their registration cancelled, revoked, or sanctioned. It also extends to whether they have provided false or misleading information to regulators or engaged in a pattern of unethical behaviour.
Importantly, the requirement is not limited to the individual alone. A CEO must also declare whether close associates such as a spouse, sibling, or business partner have been involved in these kinds of issues. The intent of this is clear, if there are concerns about a person’s conduct, their integrity, or their associations, the regulator may determine that they are not fit and proper to lead a training organisation.
Beyond this test, there are no qualification requirements. What matters is whether the CEO takes their responsibility seriously. There is no technical entry barrier, only the question of whether the person can be trusted with the responsibility of leading an RTO. In practice, it is the seriousness with which the CEO takes that responsibility, not their background on paper, that determines whether the organisation succeeds or fails.
Now, this does not mean the role is simple. Quite the opposite. The CEO of a Registered Training Organisation carries one of the heaviest responsibilities in the sector. They are the legally accountable officer under the legislation. They sign the declarations to the regulator. They are the person who answers when the organisation is found non-compliant. This is why, despite the absence of formal entry requirements, the CEO is in fact the single biggest risk in any RTO.
In my work, I see far too many CEOs who underestimate this. They think the job is about managing operations, signing off on documents, and letting others handle the details. They are wrong. The job is about leadership. It is about establishing governance, demanding accountability, and creating the systems that allow informed decisions to be made.
When CEOs fail to grasp this, the consequences are severe. I have worked with organisations that only called me after they received a notice of intention to cancel registration. By then, the damage was systemic. The root cause was always the same: poor leadership. Problems in policies or staff performance only existed because leadership and oversight had failed.
This article explores what it really means to be the CEO of an RTO. We will look at the compliance requirements, the leadership expectations, the qualities that matter, and the very real consequences of leadership failure. My aim is simple: to make the case that this role is not ceremonial, not optional, and not something to be taken lightly. The CEO either steps up and leads, or the organisation will eventually collapse under the weight of its own neglect.
The Regulatory Baseline
The starting point for understanding the role of a CEO is to strip it back to the actual requirements. There are surprisingly few. The standards and legislation do not set out a checklist of qualifications or years of experience. Instead, they focus on a single aspect: whether the person is a fit and proper person.
The Fit and Proper Person Requirements are the baseline. They are designed to test whether the person in charge of an RTO can be trusted with the role. These requirements look at factors such as:
- Financial solvency. The person must be free from bankruptcy and able to manage their affairs responsibly.
- Criminal history. They must not have convictions that would undermine confidence in their integrity.
- Previous conduct in the sector. They must not have been involved with an RTO that has had its registration cancelled or suspended.
- General integrity. They must have demonstrated honesty and transparency in their dealings.
- Confidence of the community. Students, employers, and regulators must be able to reasonably trust this person to lead with integrity.
This last point is often overlooked but is one of the most critical. The regulator has fairly subjective power to determine that a person is not fit and proper if the community cannot have confidence in them. I have seen people come unstuck here because of false declarations made years earlier to other government agencies, which later came to light. In one recent case, a CEO even provided a false employment contract for a trainer during a performance assessment. When questioned, he admitted the document was false and that he knew about it. That single act destroyed his credibility with the regulator, and he was deemed not fit and proper because trust in him had been lost. This is why when I get into some sticky conversation with the client where there is a problem that they would prefer the national regulator not know about, I am often asked for advice about how to handle these situations. Anyone who knows me will know that my advice is always very clear and immediate that you just simply tell the truth. I found throughout my entire career that bad news only gets worse with age. You are 100% better off just simply owning the situation and putting in place arrangements to ensure that something like this can never happen again. Once your integrity is blown, it’s blown!
These fit and proper person requirements are not arbitrary tests. They are intended to protect students and the sector from people who have no business running a registered training organisation. While the requirements set the baseline, once a person clears this bar there is still nothing in the law that dictates their capability or suitability as a leader. That is why leadership, integrity, and accountability matter so deeply in practice.
Governance and Leadership Standards
The more recent Outcome Standards for RTOs go further. Outcome Standard 4, in particular, addresses governance. Standard 4.1 places clear emphasis on leadership as the driving force behind compliance. It makes it plain that the CEO is not just an administrator, but the person responsible for ensuring systems are in place to monitor performance, manage risk, and support continuous improvement.
Taken together, the compliance framework sets a very modest threshold: to be a fit and proper person, and exercise leadership in line with Outcome Standard 4. The real test is not whether you meet these requirements on paper. The real test is whether you live them in practice, every day, in the way you lead the organisation.
Misconceptions and Weak Leadership
The fact that there are no qualification requirements for a CEO of an RTO creates a dangerous misconception. Too many people assume the role is light or purely administrative. They assume their job is just to sign compliance declarations, let staff handle the details, and keep the business ticking over. Others see the position as nothing more than a way into business and expect it to deliver easy money. These misconceptions cannot be further from the truth.
This view is not just wrong, it is reckless. The CEO is the person legally accountable for the RTO. If the organisation fails, it is the CEO who is held responsible. The standards are not written with “middle managers” in mind. They are written with the CEO in mind.
Where CEOs Go Wrong
In my work, I have seen a consistent pattern of weak leadership among executive officers who take their responsibilities far too lightly. Some of the common failings include:
- Lax accountability. Responsibilities are assigned on paper but never followed up, and no one is held to task.
- Poor decision-making. Choices are made casually, without reference to compliance data, industry input, or performance information.
- Outdated policies. Key governance documents are left to gather dust and are never implemented in practice.
- Ineffective management meetings. Meetings, if they occur at all, are unfocused, undocumented, and disconnected from continuous improvement.
- Casual compliance culture. The tone from the top is that compliance is a nuisance, rather than the framework that sustains the RTO.
None of these issues exist in isolation. They are all symptoms of weak leadership.
A Real-World Example
I recall working with the CEO of a reasonably large training organisation whose management arrangements were, really, non-existent. Policies were outdated. Compliance obligations were not being met. Meetings were irregular and undocumented. On the surface, the CEO insisted that compliance was taken seriously, but in practice they never engaged in the process that I was undertaking with them. They failed to attend key meetings, they did not allocate the resources the organisation needed, and as a result, nothing was changing.
I could see this organisation losing its registration within 12 to 24 months if the CEO did not start taking things seriously. I had to convince them (the CEO), if they did not step up and start leading, the regulator would eventually cancel their registration. That is not scaremongering, it is fact. The regulator does not tolerate CEOs who treat their responsibilities as optional.
The Broader Problem
The deeper issue is that these attitudes are not rare. Too many CEOs see themselves as business operators rather than accountable leaders. They think compliance is someone else’s job. They expect staff to solve problems that only leadership can fix. The result is predictable: systemic non-compliance that eventually draws the regulator’s attention through a report to the tip-off line, a complaint from a student or an industry representative, maybe an internal sharing of information between a funding provider and the national regulator. The fact is that these organisations generally always come unstuck.
This is why I often say that the biggest compliance risk for any RTO is not the quality of its trainers, its resources, or its policies. The biggest compliance risk is the CEO themselves.
When the Regulator Steps In
The true weight of the CEO role often only becomes clear once the regulator is involved. By the time I am contacted, it is usually because an RTO has already been through a performance assessment and has been found seriously non-compliant. The regulator has issued a notice of intention to cancel registration, and the organisation has a limited window to respond. That is usually the point when the CEO suddenly realises just how exposed they are.
The Nature of Serious Non-Compliance
A finding of serious non-compliance is never about one small error. It is rarely the case that a single assessment tool is at fault, or a staff member missed a deadline. Serious non-compliance is systemic. It means the regulator has identified deep failings that cut across multiple standards and go to the heart of how the RTO is managed.
These findings almost always trace back to leadership. A weak compliance culture, outdated systems, and lack of oversight do not develop overnight. They are the result of years of poor governance and a CEO who has failed to take their responsibilities seriously.
Root Cause Analysis
When I work with organisations in this situation, one of the first things we do is a root cause analysis. This is not about simply listing the non-compliances. It is about investigating how they happened in the first place.
The analysis usually lays bare the same pattern:
- The organisation has not been running structured management meetings.
- Policies exist on paper but are not implemented or reviewed.
- There is no systematic collection of performance data.
- Continuous improvement is not integrated into governance.
- Decisions are made without evidence, consultation, or follow-through.
These are not operational failures. They are leadership failures. Without proper governance, staff are left to guess, compliance slips through the cracks, and problems accumulate until the regulator uncovers them.
The CEO as the Root Cause
This is the point I often need to make bluntly to CEOs: The root cause is not the compliance manager, not the trainers, and not the policies. The root cause is the CEO. It is their leadership that failed to establish the systems, the culture, and the accountability needed to stay compliant.
That can be a hard message to hear, but it is the truth. A CEO who avoids responsibility or treats compliance lightly creates the conditions for systemic non-compliance and once the regulator steps in, the consequences are severe.
The Turning Point
For some CEOs, this moment becomes a wake-up call. Faced with cancellation, they finally understand the seriousness of their role and begin to rebuild governance with discipline and urgency. For others, it is too late. The culture of neglect is too deep, and the regulator has lost confidence that the organisation can be brought back into compliance.
Either way, the lesson is the same. The regulator does not cancel RTOs because of one bad day or one missing form. It cancels RTOs because the CEO has failed to lead.
What Leadership in an RTO Really Means
If poor leadership is the root cause of most systemic non-compliance, then it is worth asking, what does good leadership in an RTO actually look like? The answer is not complicated, but it does require discipline. Strong leadership is not about micro-managing staff or knowing every detail of the Standards by heart. It is about creating the systems and culture that allow the RTO to function with integrity and accountability.
Governance as a Daily Practice
Leadership in an RTO starts with governance. That word gets thrown around a lot, but in this context, it simply means structured management. A well-governed RTO has regular meetings that are documented, follow clear agendas, and result in accountable actions. These meetings are not just operational catch-ups. They are forums where data is reviewed, risks are assessed, and decisions are made with evidence.
I often describe governance as a daily practice. It is not something you dust off once a year when the regulator is coming. It is the consistent habit of running the organisation in a structured, transparent way. CEOs who understand this run meetings with discipline, insist on follow-through, and make decisions that are backed by information rather than hunches.
Self-Assurance and Continuous Improvement
Another hallmark of strong leadership is the integration of self-assurance processes into everyday management. This means the RTO is constantly monitoring its own performance by collecting student feedback, reviewing assessment quality, validating outcomes, and checking compliance against the Standards.
This information must then feed back into the management system. It should shape agendas, inform decisions, and trigger corrective actions. Continuous improvement is not a slogan, it is a management discipline. It is the CEO’s role to ensure that self-assurance is not just paperwork but a living system that drives better outcomes.
Informed Decision-Making
Informed decision-making is one of the most undervalued aspects of leadership in this sector. Too many CEOs make casual decisions about staffing, delivery modes, or assessment practices without understanding the compliance impact. Good leadership requires a CEO to insist that every decision is supported by evidence.
That evidence might be industry consultation, student survey results, financial data, or validation outcomes. Whatever the source, the CEO needs to see it, question it, and make sure it stacks up. Decisions made without evidence are one of the clearest warning signs of weak leadership.
Setting the Tone
Finally, leadership in an RTO is about setting the tone. Staff quickly learn what the CEO values. If the CEO treats compliance as a nuisance, staff will too. If the CEO insists on accountability, staff respond in kind. The first half of my career was spent in uniform, serving my country with the Australian Army. I saw what good leadership could achieve, and I also saw what happened when leadership failed. Culture always flowed from the top.
I have seen RTOs where the CEO makes it clear that integrity and accountability matter, and the whole organisation reflects that seriousness. I have also seen RTOs where the CEO is casual and evasive, and the organisation becomes sloppy and non-compliant. The difference is striking, and it always starts with the leader.
The Cost of Leadership Failure
When leadership in an RTO is weak, the consequences are not theoretical. They are real, severe, and lasting. I often remind CEOs that the regulator does not step in lightly. If an organisation has reached the point of serious non-compliance, it is because failures have accumulated over time and leadership has ignored the warning signs.
Cancellation of Registration
The most obvious consequence is cancellation of registration. When an RTO loses its registration, it loses the right to operate. Students are displaced, staff are left without work, and the organisation’s reputation is destroyed. In many cases, cancellation also means the CEO’s name is now attached to a failed provider, which can make it very difficult to ever return to the sector.
Reputational Damage
Reputation in this industry is fragile. Word travels quickly among students, employers, and regulators. Once an organisation is publicly listed as non-compliant or has its registration cancelled, the reputational damage can be permanent. Even if the provider somehow survives, rebuilding trust with students and industry is a long and difficult road.
Disruption to Students
One of the most painful consequences of leadership failure is the disruption caused to students. When an RTO collapses or has its registration cancelled, students are left without clear pathways to complete their training. Their time, effort, and money are at risk. The organisation may arrange for them to transfer, but the impact on their confidence and outcomes is significant. A responsible CEO should never forget that leadership failures directly affect the people the RTO exists to serve.
Financial Loss
Leadership failure is also expensive. Owners and investors can lose substantial amounts of money when an RTO is shut down. Refunds must often be paid, assets lose value, and future revenue disappears overnight. But even before cancellation, the costs of trying to save a failing organisation can be crippling. CEOs often face high consulting fees, exorbitant legal costs, and the direct expenses of undergoing a performance assessment. The regulator can also impose fines that add to the financial pressure. For many organisations, this combination of costs is financially fatal.
Personal Impact
There is also a very real personal impact on the CEO. While there may be no formal qualification requirement to step into the role, once you are there, you carry the weight of ultimate accountability. I have seen CEOs under enormous stress as they try to fight for their organisation’s registration. They lose sleep, they carry the worry home, and the strain often affects their health and family life. In many cases they feel powerless, relying heavily on consultants, lawyers, and others to steer the process. For some, this pressure is overwhelming. And for those who treated the role casually in the first place, the stress is compounded by the knowledge that their own leadership decisions helped create the crisis.
The Central Lesson
The lesson here is stark but unavoidable. Leadership failure equals organisational failure. It is not the compliance manager’s fault. If the CEO is weak, the organisation will eventually fail, and the consequences will be borne by students, staff, owners, and the CEO personally.
The Qualities of a Responsible CEO
We have talked about systems, governance, and self-assurance, but at the end of the day leadership is not only about structures. It is also about character. The qualities of the CEO set the tone for the entire organisation. If the CEO demonstrates honesty, integrity, and courage, those values filter through to staff, trainers, and even students. If the CEO cuts corners or treats compliance casually, the organisation will do the same.
Honesty
Honesty may sound obvious, but it is not always practiced. A CEO must be willing to face uncomfortable truths. If student results are not up to standard, if assessment tools are inadequate, if industry engagement has been neglected, the honest CEO acknowledges it and takes steps to fix it. Pretending problems do not exist is not leadership, it is avoidance.
Integrity
Integrity means doing the right thing, even when it is inconvenient. In an RTO this often shows up in decisions about compliance versus business pressure. For example, enrolling a student who clearly does not meet entry requirements may boost numbers in the short term, but it compromises the integrity of the program. A CEO with integrity insists on doing what is right, even if it costs money or time.
Moral Courage
Moral courage is one of the hardest traits to find but one of the most important. Running an RTO involves tough decisions: telling staff they need to lift their practice, telling owners that shortcuts cannot be taken, or admitting to the regulator when something has gone wrong. A responsible CEO does not hide from these moments. They have the courage to confront them head-on.
Setting the Example
Every organisation reflects its leader. If the CEO arrives prepared for meetings, takes compliance seriously, and follows through on commitments, staff see that and emulate it. If the CEO is casual, dismissive, or evasive, the culture quickly follows. Setting the example is not about speeches or slogans. It is about consistent behaviour.
Why These Qualities Matter
The regulator cannot legislate honesty, integrity, or courage. They can only test whether someone is a fit and proper person. But in practice, these leadership qualities are what determine whether an RTO succeeds or fails. They shape the culture, inform decisions, and sustain compliance over time.
The truth is that you can meet every technical requirement and still fail as a CEO if you lack these qualities. Conversely, I have seen leaders with no formal background in training succeed because they lead with seriousness, integrity, and accountability. The difference is not qualifications. The difference is character.
Conclusion
There are no formal qualification requirements to be the CEO of an RTO. You do not need a degree, a teaching background, or a compliance certificate. On paper, the only test is that you are a fit and proper person. But in practice, the demands of this role are far greater.
The CEO is the person who carries ultimate responsibility for compliance, governance, and leadership. When systems are weak, when accountability is absent, and when decisions are made without evidence, the result is always the same: systemic non-compliance. This is why the CEO is, without question, the biggest risk in any RTO.
I have seen organisations fail when CEOs treated the role lightly, and I have seen organisations thrive when CEOs embraced it with discipline and integrity. The difference is not qualifications. It is whether the CEO accepts the full weight of responsibility.
A capable CEO establishes governance systems, runs disciplined meetings, insists on evidence, and embeds continuous improvement into the fabric of the organisation. More importantly, they model the qualities that matter most: honesty, integrity, moral courage, and setting example. The culture of an RTO always mirrors the standard set by its leader.
The regulator does not cancel RTOs because of one bad day. It cancels RTOs because leadership has failed over time. But that failure is not inevitable. CEOs who take their role seriously can build strong systems, lead with integrity, and create an organisation that withstands scrutiny.
So, while there may be no qualification requirements, there is a much higher bar: responsibility. The CEO of an RTO must take that responsibility seriously and lead with purpose. Done well, the role is not just about avoiding failure. It is about building an organisation that delivers genuine quality, that earns trust from students and industry, and that thrives because of strong, principled leadership.
If you are a CEO reading this and some of these risks sound uncomfortably familiar, then this is your moment to act. You cannot change what has already happened, but you can decide how you lead from this point forward. Take responsibility, strengthen your governance, insist on integrity, and set the tone that your organisation needs. The role you hold is not a burden; it is an opportunity. Done well, it allows you to create an RTO that delivers genuine quality, earns the trust of students and industry, and stands the test of time. Now more than ever, we need a strong vocational education and training sector. We all have a role to play in achieving that. What is your role?
I remain highly optimistic about the vocational education and training sector. But if we do not hold ourselves accountable, we risk losing the trust of students, industry, and the community. The strength of our sector will not come from regulation alone. It will come from leaders who choose to step up, set the standard, and take their responsibility seriously.
Good training,
Joe Newbery
Published: 27th August 2025
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