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Quantum investigation shows manipulation maximised earnings

TEC: Quantum investigation shows manipulation maximised earnings
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Media release – 20 December 2017

An investigation report released today into the now defunct Quantum Education Group shows it deliberately took advantage of reporting procedures to enable the business to keep millions of dollars in student fees.

The Tertiary Education Commission (TEC) appointed Deloitte in 2015 to investigate the Auckland based tourism, IT, counselling and business trainers after becoming aware of concerns about the accuracy of its student enrolments, TEC chief executive Tim Fowler says.

“The TEC finds it extremely disappointing that an organisation supposed to help learners instead sought to exploit enrolment provisions and retain student fees for courses that were never completed.”

The investigation found that Quantum, which was bought by Intueri Education Group Ltd in 2014, took steps to retain newly enrolled students on its ‘books’ until the students were no longer entitled to a fees refund, but before Quantum had to officially record their enrolment. That meant Quantum could keep the fees, which were often paid with student loans.

“This is a complex issue but essentially, Quantum managed to retain withdrawn students’ fees without ever having to register that the students were enrolled. That meant flags weren’t raised with government agencies responsible for monitoring Quantum’s performance,” Mr Fowler says.

“This wasn’t illegal but we need to note it was entirely unacceptable. The business deliberately sought to bring in student fees and not have to either train the students, or report enrolments. It wasn’t until they were directly required to cease the practice that they did. That it did this should have been inconceivable to professional educators.”

Quantum has been wound up and parent company Intueri has also shut down. Although they retained student fees for withdrawn students, they did not claim government funding from the TEC.

As Intueri is now in liquidation, and the practice did not result in TEC funding being provided for study of the withdrawn students, the TEC is not seeking the return of any money.

“However, publishing this investigation report, including the details of the steps Quantum took to maximise revenue, is an important part of drawing attention to this issue, signalling to the wider sector that such behaviour is not tolerated and that appropriate measures have been, and will continue to be, put in place to stop it.

“Although further action is no longer being taken by either the Serious Fraud Office or Financial Markets Authority, this report makes it clear some of the practices at Quantum failed to meet proper ethical standards.”

The TEC, along with the Ministry of Education and StudyLink, has aligned reporting procedures so that all student enrolments must be reported.

The full investigation report is attached or available at www.tec.govt.nz

ENDS

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