$26.5M Fine For Poor Quality Provider

Date —

23 Sep 2019

Industry Sector/s —
Vocational Education & Training

Summary —

The Federal Court has ordered $26.5 million in penalties against Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (in liquidation), and ordered Empower to repay more than $56 million to the Commonwealth for funding it had received to provide the courses.

Key Issues —

The Australian Competition and Consumer Commission (ACCC) has successfully taken action against Empower Institute in the Federal Court, that saw an order for $26.5 million in penalties and an order to repay more than $56 million to the Commonwealth for funding it had received to provide the courses.

The Federal Court found that Empower had engaged in a system of unconscionable conduct when it enrolled consumers in VET FEE-HELP funded courses. The court found the organisation did so by marketing courses to consumers in remote communities, indigenous communities and low socio-economic areas, making false or misleading representations, using recruiters who were practically untrained and, in some cases, offering inducements such as free Google Chromebooks.

Between June 2014 and December 2014, Empower enrolled more than 4,000 students. It ceased trading and in April 2017 and entered into voluntary liquidation.

The Court described Empower’s conduct as involving a “callous indifference” to consumer protection, including signing up consumers for courses which meant they took on large VET-FEE HELP debts, for Empower’s financial gain.

The VET FEE-HELP program was poorly designed and the Independent Tertiary Education Council Australia (ITECA) had counselled the Australian Government about the risks to students, taxpayer funds and the reputation of the vocational education and training (VET) system.

Since the closure of the VET FEE-HELP program ITECA has worked collaboratively with the Australian Government to ensure a student-centric approach to funding and loan programs.

Based on the Court’s findings and using the new VET FEE-HELP Student Redress measures, the Commonwealth has decided to cancel the debts of over 6,000 consumers enrolled in courses with Empower in 2014 and 2015.

Member Engagement:

ITECA’s ability to play a lead role in matters associated with this issue rests on the advice and guidance of individuals serving on the ITECA Vocational Education Reference Committee.

Further Information:

For more information on this issue please send an email to vocational.education@iteca.edu.au or telephone 1300 421 017.  Stay up to date via Twitter @ITECAust or via Facebook at www.facebook.com/ITECAust.

Disclaimer & Copyright:

The material published on this website page is intended for general information only and is not legal advice or other professional advice.  It may not be reproduced without ITECA’s prior written consent.

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