Recently I read this very interesting article, and as I have written many articles, and spoken at length to people on doing thorough due diligence when purchasing an RTO, I thought was important to share the findings:
A recent decision of the Administrative Appeals Tribunal (AAT) in Ivy Education Group Pty Ltd v ASQA [2013] AATA 138 provides some important lessons for RTOs. The registration of Ivy Business College (Ivy) was cancelled by the AAT.
First, conduct due diligence before buying an RTO. The former regulator VETAB had placed conditions on Ivy in April 2011 and June 2011. Those conditions included that an monitoring audit was to take place within 12 months. When new owners purchased the business in September 2011 they were not aware of this important condition because of a failure to conduct appropriate due diligence.
Secondly, and on a more positive note, if ASQA make a decision to cancel the registration of an RTO for non-compliance then, if an application is made to have that decision reviewed by the AAT, the time between the application for review and the hearing before the AAT can be used to continue to rectify any issues of non-compliance identified by ASQA. That is, the AAT will examine the level of compliance by the RTO at the date of the hearing. If issues have been fully addressed the AAT will be in a position to reverse the decision of ASQA, not because ASQA made the wrong decision but because the RTO has rectified any non-compliance. RTOs can take advantage of the time before the hearing to rectify non-compliance.
Thirdly, those acquiring an RTO need to make sure that they are aware of their compliance obligations. The AAT found in Ivy that the new owners of the business were unaware of the Standards for NVR Registered Training Organisations 2012. These standards are critical and owners should ensure that they are aware of them and that the RTO’s management are complying with the standards.
Fourthly, student attendance is a critical issue. Ivy had conditions imposed by the regulator because of very low attendance by its students. Evidence before the AAT was that student non-attendance was still extremely low and the issue had simply not been rectified.
Fifthly, if there has been sufficient time to rectify non-compliance and the RTO has not taken advantage of the time then the AAT is quite likely to confirm the decision of ASQA to cancel the registration of the RTO.
Dr John Tarrant, Barrister can be contacted on Email: john.tarrant@westnet.com.au