Call for rules on education market risks

Hu Min
Advisers seek risk alarm system so parents can be confident their children's classes are not affected when institutions suddenly shut their doors and go out of business.
Hu Min

A risk alarm system and an insurance mechanism have been suggested by 17 advisers to regulate the education training market and prevent financial loss for parents.

Last year, 12,000 education training institutions closed across the country, leaving parents who had prepaid in the lurch, the proposal said.

Easy entry to the market led to businesses that were poorly managed, and some had even used fake promotions to lure parents.

A risk alarm system based on the scale, operation duration, credibility, expansion and financial situation of education training operators is necessary, the proposal said.

Education authorities are suggested to rate operators based on their financial safety, which gives reference to the setting of different levels of deposits they are required to pay, and the rating should be made public and the deposits exclusively supervised, the proposal said.

An insurance mechanism could also be introduced with financial institutions developing products to safeguard consumers' finances as they could get compensation if businesses closed, the proposal said.

A guarantee system should be established to ensure children can be transferred to other institutions in case of a sudden closure, advisers said.

The access threshold for operators based on their financial situation, scale, education experience and credibility should also be raised, the proposal said.

Last month, three Lego Education centers in Shanghai shut down, disappointing hundreds of students.

In October, Webi English closed its branches in Beijing, Shanghai, Chengdu and Guangzhou suddenly due to financial problems.

Shanghai Consumer Council received 10,915 complaints regarding education services in 2019, an increase of 55.6 percent from the previous year, with foreign language, extracurricular classes and early education angering parents.

Many dishonest education operators dangled promotions to trick consumers into signing long-term contracts at hefty tuition rates, the council said. Some also offered loans to students who couldn't pay up-front course fees.

Other complaints were related to poor facilities, unqualified teachers, shortened courses and difficulties in obtaining refunds, according to the council.

Some schools closed suddenly without providing refunds to students or parents, the council said.

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