How to solve a problem like insurance?
Greg Gregory, from edtech insurer CPU, discusses why insurance is the fine print schools overlook in 1:1 purchasing arrangements
Many schools will soon start procuring new edtech hardware in time for the next academic year, and the raft of trade shows in the calendar means leadership teams will speak to an enormous number of resellers in the coming weeks and months.
For many schools, warranties are a given, and with many resellers offering three-year cover, peace of mind is assured in many cases. But, according to CPU – an edtech insurer for schools – the growing number of parents contributing to the cost of devices through 1:1 agreements poses unseen problems for schools. These arrangements are attractive because they enable parents to buy technology at a discounted rate through monthly instalments arranged by their child’s school. Schools can divert pupil premium funds to help pay for the equipment of students from disadvantaged backgrounds.
Greg Gregory, the company’s managing director, says state and independent schools are increasingly inviting parents to contribute towards the cost of new edtech hardware, so the payment of the device is subsidised by a parent or guardian making a voluntary contribution. But he says too few schools understand the complex laws that surround the regulation of these seemingly straightforward contracts.
In 2015, Instar Digital Ltd – a Stafford-based provider of IT schemes including student 1:1, salary sacrifice, and staff purchase schemes – went into liquidation, owing creditors more than £600,000.
It had collected direct debit payments but not paid them on to schools. The Financing and Leasing Authority (FLA) produced advice for schools on tips for using leasing arrangements, which included finding out who the finance company is. It is examples like this that Gregory says can be avoided with proper insurance cover. CPU are regulated by the Financial Conduct Authority and Gregory says that it is important to ensure that all providers are covered by a regulator before entering agreements.
- Research types of agreements and cross reference with the Department for Education
- If schools plan to use these agreements, ask resellers what warranties they offer and what insurance protection they recommend for students, parents and the institution itself
- Ensure all providers are regulated by the relevant non-government bodies, like the FCA
- Check testimonials and companies’ track records
- Ask for written confirmation that agreements are legal before signing up
“Unlike universities, which will hold a consumer credit licence which enables them to promote a financial product to students, secondary schools do not. Because they do not hold such licences, schools cannot and should not offer what is referred to as a regulated financial agreement to parents, such as hire-purchase (HP) or buy-now-pay-later (BNPL) agreements,” Gregory explains.
“Schools cannot introduce a company that will finance the equipment on behalf of the schools directly to the parents. It is illegal,” he adds.
“I’ve seen a few instances over the years where unfortunately some resellers are compelling schools to promote an HP agreement,” he explains.
Gregory says he has encountered many transgressions in his 20-year career.
“I encountered an example recently where a retail finance company was suggested to the school, which in turn promoted it to parents. It’s really down to the reseller to advise schools on legal matters. We as an insurer do not presently deal directly with schools,” Gregory explains.
Gregory recommends that schools ask resellers that use a regulated finance agreement to give written confirmation that the agreement is legal before entering into a deal, which would give schools powers of redress at a later stage.
These agreements, which rely on schools being able to recoup the costs of the devices through the parent payment plans, must ensure the insurance and warranty cover is sufficient because faulty repairs or denied insurance claims will damage the relationship with parents and could lead to a reduction in recouped contributions. Likewise, Gregory advises schools to check that their insurance companies use only manufacturer-approved repairers, because there are cases of insurers “trying to cut costs from the expense of repairs, that hire repairers using grey market, third-party components”, all of which could nullify the product’s warranties and lead to further disruption for students and parents.
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