The Customer First Programme : delivery of student finance, Department for Business, Innovation & Skills

In 2009, the Student Loans Company took over the processing of loan and grant applications for new students from England which had previously been carried out by 130 local authorities.

The Company's document scanning system was launched before being fully tested.

Its failure was critical, and the Company's contingency plan was both flawed and implemented late.

The Company took 33 per cent longer to process applications in 2009-10 compared with local authorities in 2008-09, and only 46 per cent of new applications had been fully processed by the start of term.

By September 2009, 241,000 applications had been received but not fully processed.

This led to a dramatic increase in the volume of calls, with the Company receiving over four million in September - 87 per cent of which were unanswered.

The Company had failed to communicate key messages to applicants that would have helped to reduce unnecessary calls.

The customer service provided by the Company in 2009 was poor.

The NAO also raises concerns about the Company's performance in managing Disabled Students' Allowance. By the end of 2009, only 4,000 of 17,000 applications had resulted in a payment, taking an average of 20 weeks to be processed.

The Department for Business, Innovation and Skills and the Student Loans Company underestimated the challenges in centralising this service.

Neither the Department's monitoring of the Company nor the Company Board's oversight of the Programme were effective.

Substantial risks remain to the successful delivery of the service in 2010.