Overseas Education Advisory Services Impartiality & Transparency under Scrutiny – Call to Strengthen Self-Regulation and Improve Service Quality

27 June 2018
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Overseas Education Advisory Services Impartiality &  Transparency under Scrutiny –  Call to Strengthen Self-Regulation and Improve Service Quality

Each year hordes of students from Hong Kong travel abroad for education.  Despite the vast amount of information available in the market, the search process and application procedures prove all too often complicated and cumbersome for parents and students to possess a firm grasp of the subject matter.  Coupled with the huge investment involved, the demand therefore, is strong for customised overseas education advisory services.  But a Consumer Council study, entitled “Are Students Protected?  An In-depth Look into Overseas Education Advisory Services”, released today (June 27), reveals that many service providers marketed themselves as “consultants” were in fact acting in the capacity of agents for overseas education institutions, and remunerated mainly for recruiting students for those institutions.  As such, their advice to the students in overseas education could be driven by commercial interest, in which the best interests or particular needs of the students might not be placed in the top priority, raising serious concerns over their impartiality and independence.  The report also found inadequate disclosure and transparency, and variations among the service providers in professional knowledge and service quality.  Furthermore, as their services are purportedly “free”, both the consumers and service providers are not bound by contractual obligations, and in the event of disputes or problems with service quality, consumers are left out in the cold with almost no recourse to redress.

In stressing that the quality of overseas education advisory services has far-reaching impact on not only the career prospect of the students but also the sustainable development of a high-quality human capital in Hong Kong, the Council calls on the industry to enhance their information transparency, strengthen their Code of Conduct and accreditation of the consultants, promote the use of service contracts and introduce a complaint redress mechanism for the safeguard of consumer rights and interests. 

Research objectives & methods

The research spanned over a period of 9 months.  Aside from many field visits to education expos, a survey questionnaire was sent to service providers (29 respondents); a consumer opinion survey was conducted (61 valid returns); 4 focus group meetings were held (2 for students, 1 for parents and 1 for mystery shoppers); and visits to service providers were successfully made for a total of 39 times by way of mystery shopping visits.  In combination with the personal experiences of the users (students/parents) and the mystery shoppers, the information and data collected were integrated and analysed for an insight into the current market practices and drawbacks.  Drawing also on the experiences of 7 different jurisdictions around the world in respect of their regulatory measures on overseas education advisory services, the Council has put forward a package of practicable improvement proposals. 

The findings

To many students and parents, whether to  study abroad is big decision which also involves a huge investment.  Choosing on your own the education institution and study course will first of all require the research of a vast amount of information.  As the institutions are located in different countries and regions, it is difficult if not impossible to check out each one of them.  Many would  turn to the service providers for advice and assistance in the complicated application process.  In fact, from the study positive comments were received from consumers to compliment on the service providers for their professional advisory role in overseas education.   Notwithstanding, the Council’s study has found areas of inadequacy which need to be addressed.  And the conclusion of the study is summarised below.

Impartiality under question

Currently, many overseas education advisory service providers market themselves as “consultants” but according to the Council’s trade survey, 86% (25 out of 29 respondents) professed that they were in fact “agents” representing overseas education institutions in student recruitment in Hong Kong.  In contrast to general consumer experiences, during the 39 mystery shopping visits, none of the service providers took the initiative to disclose their commercial relationship with the recommended institutions despite some admitted after being asked about their “agent” role.  Such a practice is tantamount to withholding or concealing material facts on which the industry should rectify.

It is understood that the source of income of the “agent” is dependent largely on the commissions of overseas institutions, amounting to 10-15% of the tuition fee for the first academic year, a most considerable sum.  Their role as an “agent” is different from that of service providers of personalised advisory service for consultation fees directly from parents/students.  Concerns have been raised that recommendations made by these firms marketing themselves as “consultants” may tend to tilt towards the institutions which provide the commissions or even to those offering higher reward. 

For instance, in the focus group discussions, a student indicated her desire to pursue a culinary career in France. But as she was not able to secure the necessary student visa as promised by the service provider, it advised her to first take up a 2-year language course in the US it organised. This brings into question whether the service provider was serving for its own commercial interest rather than the interest and welfare of the student. 

The Council report points out that the ambiguous role of overseas education advisory organisations had given rise to questions – whether they are a “consultant” representing the student or an “agent” of the institution, on what basis of compensation are they paid, the amount involved, were all closely interrelated with their impartiality.  If consumers have no hesitation in accepting the purportedly “free” advice due to the neglect of the consultants’ commercial relationship with the recommended education institutions, they can never be able to have a comprehensive analysis of the pros and cons; and in such a case they can easily be led into a mistaken decision.

Inadequate information transparency

The study finds that the lack of disclosure and transparency was an issue amongst the charges and terms and conditions offered by the service providers.  This may place parents/students at a serious disadvantage position in the course of choosing overseas education institutions due to information asymmetry.  In the mystery shopping visits, all the service providers did not readily disclose information about their charges, unless directly inquired by the consumers; otherwise no information on the means of reward would be proffered, let alone the disclosure of the actual sum of the compensation. 

In the mystery shopping visits, only 1 service provider made available a service application form to the consumers to fill in.  32 did not explain the terms and conditions of using the advisory services, and all did not display any price lists.  In 1 mystery visit, the investigator posing as a mainland student was initially quoted a fee of $12,000 during the face-to-face enquiry but it was later raised to $20,000, claiming $12,000 was the rate for referral only.

The Council deemed that in the absence of a clear price list, such floating service charges for different types of customers may constitute a form of price discrimination injurious to consumer rights and interests, and an unfair trade practice.

Variations in quality of services

The research also highlighted the lack of adequacy and reliability in the provision of information by the service providers.  For instance, in the 39 mystery shopping visits, 13 shoppers were promised by the service provider a place at the education institutions of their choice if they could meet the public examination requirements.   For those who could not meet the requirements, they could first undertake remedial or diploma courses.  But, only few service providers guaranteed that completion of the suggested remedial study (assuming the study results meet the standards) would assure them of admission to their preferred institutions or courses.  There was also a case where the service provider was unable to provide information on the ranking, transportation, facilities and accommodation arrangements of the institutions that the students preferred; the shopper was left to their own devices to look for the answers. 

Further, most of the service providers could not provide certain essential information, for example, chance of internship for international students (e.g. for the medicine discipline); steps required to convert overseas professional qualifications for local recognition; matter regarding accreditation, the possibility of working in the country after graduation, as well as whether the proposed destinations of overseas study would be safe.  1 student travelling to the US for overseas study had not been informed beforehand by the service provider that the hostel of the institution was located some distance away from the city.  After setting in she found that the security in and around the student hostel was poor with frequent incidence of armed robbery and gun shooting. 

The sales practices of many service providers also left much to be desired, for instance, bundling of services, pitching of side-business and lacking professional knowledge, etc.  1 student applying to study at a university in Japan received an offer from the university, but was required to enrol in a Japanese language course organised by the service provider, otherwise the offer could be withdrawn.  Another case was a student applying to study in the US but in the course of the consultation were continually persuaded to join also the investment immigration programme.

Further, some service providers were suspected to have engaged in misleading selling.  In 1 case, a student was advised that he must take a foundation course.  But later in his sophomore year, he found out that there was no requirement for the completion of a foundation course as it was not a pre-requisite of his degree course. 

Lacking Redress Mechanism

In cases of dispute, all service providers did not have in place a complaint redress mechanism, and because the provision of the service did not involve monetary transactions nor contractual obligations, it would be difficult for consumers to seek redress through litigation by contract law. Other possible civil remedies, for example those under the Trade Descriptions Ordinance or in tort would require considerable time to pursue and it is difficult to predict the costs to be incurred in particular if tort is resorted to.  Thus, they are not viable options open to the consumers.  In the face of such a crucial consumer decision, in the pursuit of higher education, the protection afforded to consumers is clearly inadequate. 

Recommendations

In referencing overseas experience from 7 jurisdictions (Australia, Canada, the US, the Mainland, New Zealand, Taiwan and the UK), the Council found that territories opting for the legislative approach usually have large numbers of higher education institutions and overseas students.  As the size of the Hong Kong market is comparatively small and the long lead-time and public resources involved in legislation, the Council considers that regulatory oversight by legislation of the industry would not be the most effective approach, and recommends that Hong Kong can draw reference from New Zealand, the  Mainland, Taiwan and the UK in adopting a self-regulatory approach, which can expedite the industry improvement in service quality and transparency, ensuring in the process  the sustainable development of the overseas education advisory market and the enhancement of consumer protection.

Recommendations to the industry:

1.         Service providers offer service contracts to consumers – the terms and conditions should be explicitly set out for both parties to understand their rights and obligations.

2.         Provide a list of consultants for public reference – with verification of individual membership profile and qualifications by Hong Kong International Education Consultants’ Association (HKIECA).

3.        Establish a redress mechanism for dispute resolution by the HKIECA – an independent complaint review committee to handle unresolved complaints from consumers.

To strengthen the HKIECA’s Code of Conduct (the Code), and to achieve its objective of enhancement to service quality and consumer safeguards, the Council proposes the Code to cover:

1.        Ethical standards and good industry practices in line with international best practices and trend;

2.        Guidelines governing relevant regulations for consumer protection such as the Trade Descriptions Ordinance, and the Personal Data (Privacy) Ordinance;

3.        Mandatory disclosure of the capacity as the agent of the educational institutions and the commission for making referral, and display of a price list for easy reference;

4.        Standardisation of the types of qualifications of the consultants that can be displayed and the manner in which they are displayed, and provision of easy access to consumers for verifying the claims of qualifications;

5.        Regular training requirements for service providers to enrich their professional knowledge.

Recommendations to the Government:

In Hong Kong, many people who wish to study aboard would rely on the advice given by providers of overseas study advisory service in making their decisions on overseas education.  However, the service quality of them varies and this may put consumer interests at risk.  The Government should proactively put the conduct of that industry under scrutiny and provide it with proper guidance.  From consumer perspective, it is also important to offer the right assistance for making informed choice.  Below are the Council’s recommendations to the Government:  

1. Increase subsidy to the existing schemes such as Home Affairs Bureau’s Funding Scheme for Youth Life Planning Activities and Education Bureau’s Career and Life Planning Grant in order to raise the support capabilities of career masters in local secondary schools to help students gauge their suitability for aspired career, and offer more guidance in their search for education options.

2.        Publish online consumer guides covering information about conversion of qualifications obtained from different overseas educational institution into locally recognised ones.

3.        Relying solely on the industry to raise their own funds to pursue the various proposed measures would most likely result in slow progress.  Some form of Government assistance is needed for the industry, possibly a one-off seed capital or facilitation in funding applications, would help accelerate the development.

4.        Develop guidelines, in cooperation with the industry, on marketing and promotion so that consumers can obtain accurate information. 

As overseas education tuition fees could run into a  million of dollars, any improper choice of the institution and the course is not only a waste of precious money and would adversely affect the students’ life development, but can also jeopardize the human capital development and competitive edge of Hong Kong in the long term.  In view of this, the Consumer Council urges the Government and key stakeholders to join hands and act in concert to strengthen the transparency and professionalism of the overseas education market so as to safeguard the interests of the young consumers – and their future.