Fee recovery: Legal proceedings for fee recovery

Fees play a large part in enabling independent schools to deliver the quality education students and parents expect. However, what happens when there’s a failure to pay? James Garside, associate at Veale Wasbrough Vizards look at the options available to you and the steps you can take before you resort to…legal proceedings for fee recovery

What options are available to bursars where there’s a failure to pay fees?

There is no ‘one size fits all’ approach to effective credit control and, in our experience, the school will get the best results by tailoring its approach to the particular circumstances of the case. We recommend keeping the following points in mind.

Timely due diligence

It’s important to quickly establish the parent’s reasons for non-payment as these should shape the school’s approach to debt collection – is it that they can’t, or simply won’t, pay the fees? This can usually be established through effective correspondence and financial due diligence.

Effective correspondence

When writing to parents set short return dates to maintain control of correspondence and try to resolve matters quickly. Remind parents of their contractual obligations and clarify the consequences of failing to honour these; this may help to focus their attention. Where correspondence fails, try a more direct approach – telephone, for example – as this may help to establish a dialogue with a reluctant parent.

Alternatives to court action

For the ‘can’t pays’ – schools may wish to explore securities, third party financing and flexible payment terms as a means of resolving matters. Care should be taken to ensure any agreement is lawful and does not unnecessarily compromise the school’s contractual rights.

If the school has a hardship or bursary fund it may be appropriate to consider whether the parent might qualify in order to help them meet future liabilities – the school can guide them through any applicable application process. Ultimately, if the parent cannot afford the fees and no other solution is viable, the school should consider exclusion of the pupil for non-payment of fees to avoid unmanageable escalation of the debt.

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For the ‘won’t pays’, if the school can establish and resolve the reason for non-payment, payment will usually follow. Schools have statutory complaints handling obligations which relate to issues raised while the pupil is or was at the school. An effective investigation and considered decision about concerns may expedite resolution and payment.

Where there is a genuine dispute, and the school’s internal procedures have been exhausted, the school is obliged – by the Civil Procedure Rules 1999 and the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 – to consider alternatives to court action, which may include a settlement meeting, an exchange of settlement proposals in correspondence, formal mediation or a referral to the Ombudsman Service. All can be effective but the appropriate option, if any, is case-specific.

Lawful contractual arrangements

Remember that, above all, a clear and lawful parent contract which deals expressly with late payment of fees and the school’s remedies (to include interest and cost provisions) is the cornerstone of effective credit control.

Parents are consumers and entitled to additional statutory protections. The Consumer Contracts Regulations 2013 and the Consumer Rights Act 2015, for example, impose requirements on schools around pre-contractual information and cancellation rights and, for the first time, parents have statutory remedies for non-compliance. Failure to have regard to these protections may lead to disputes about payment and/or release the parent from liability for the fees altogether.