Site Group and Captain Cook College hit with $30m in fines for pressuring students into courses

Embattled vocational training group Site Group International (ASX: SIT) and one of its former subsidiaries Captain Cook College have been hit with a total of $30 million in fines by the Federal Court for misleading prospective students undertaking online diploma courses almost a decade ago.

Captain Cook College took the biggest hit, with a penalty of $20 million for engaging in “systemic unconscionable conduct” and $750,000 for making false or misleading representations to students in connection with online diploma courses under the former VET FEE-HELP loan program.

Site Group, which was placed into voluntary administration in March this year and operated Captain Cook College at the time of the offending, has been fined $10 million for being knowingly concerned in Captain Cook College’s system of unconscionable conduct.

The former chief operating officer of Site Group, Blake Wills, was also penalised $400,000 and disqualified from managing corporations for three years for also being knowingly concerned about the system of unconscionable conduct.

Site Group, a company that provides vocational training services for the oil and gas, construction, mining, hospitality and industrial sectors, entered voluntary administration earlier this year after failing to reach a compromise over $11 million in penalties being sought by the Australian Competition and Consumer Commission (ACCC).

The penalty came on the heels of an adverse finding by the Federal Court against Captain Cook College four years ago. Site Group had only made a $1.1 million provision in its books for the penalty.

The Brisbane-based Captain Cook College, which was also placed into administration in March, was established in 1998 and was acquired by Site Group in 2014. It ceased substantive trading at the end of 2016.

The ACCC had alleged that the college, which received “tens of millions of dollars of Federal Government funding”, had removed consumer safeguards from its enrolment and withdrawal processes from 7 September 2015.

This led to Captain Cook College hiring recruiters who worked for commissions and who were found to have used high-pressure sales tactics and incentives to entice consumers to vocational courses being offered.

The court found that the removal of these safeguards meant that thousands of students incurred substantial debts, despite the fact they were not engaging with their courses.

The ACCC says this left about 5,500 consumers with VET FEE-HELP debts totalling more than $60 million, even though the vast majority of them failed to complete any part of their course. About 86 per cent never even logged in to their online course.

The government eventually waived the VET FEE-HELP debts for these Captain Cook College students and withheld some of the payments from the college.

“Captain Cook College’s conduct not only cost taxpayers tens of millions of dollars, but it also caused distress to the thousands of consumers enrolled in their courses who for many years were told they had significant debts to the Government,” says ACCC chair Gina Cass-Gottlieb.

The penalties handed down by the Federal Court today follow two unsuccessful appeals by Captain Cook College, Site Group and Wills against the systemic unconscionable conduct findings.

“We are pleased with this outcome which sends a message to all businesses, including those seeking to obtain government funding, that they must comply with the laws which protect consumers,” says Cass-Gottlieb.

“The judgment also shows the ACCC’s determination to pursue individuals in appropriate cases.”