NURSERIES have to refund parents who paid for childcare they didn’t use during the coronavirus lockdown, the regulator has said.
The Competitions and Markets Authority (CMA) has issued a warning to childcare providers that they could face legal action if they’ve been pushing unfair costs onto families when nurseries were closed due to the pandemic.
Nurseries, pre-schools and childminders that threatened a child’s place if the parents didn’t cough up fees during lockdown were also breaking consumer rules.
It comes as the regulator probes into reports of unfair cancellations by nurseries, wedding firms and holiday businesses.
The CMA said it accepted that childcare providers had been hit hard by the effects of lockdown but that the costs shouldn’t be forced onto parents.
The watchdog added that it wasn’t fair for nurseries to put pressure on households to cough up the fees to stop the business from going bust.
The government ordered all schools and nurseries to close down on March 20 to stop the spread of Covid-19.
They were only allowed to stay open to provide childcare for children of key workers.
Under consumer law, parents should not be expected to pay for services that couldn’t be fullfilled.
Yet research by Which? found that around 30 per cent of parents were forking out up to full price to hold their child’s place at nursery during the lockdown.
Nurseries were only allowed to charge reasonable fees during this period if it provided the services via other methods, such as online learning, as long as parents agreed to the changes in contract.
But the fees must be reduced to cover just the immediate costs, not including those that were reimbursed in other ways such as government financial support schemes, for example furlough.
In an open letter to the early years sector, Gordon Ashworth, director of the consumer group at the CMA, said: “Contract terms requiring consumers to pay providers who are not providing the services agreed in the contract are likely to be unfair and unenforceable.”
It also warned that nurseries shouldn’t be charging for unfair cancellation terms during lockdown, such as demanding an unreasonable notice period.
The regulation isn’t new but the regulator is calling on businesses to check that they followed the rules correctly during lockdown.
Parents can make a claim against a nursery if they have not followed the regulations – this is on top of any enforcement action that the regulator takes too.
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said that lockdown had been “very challenging times for parents and providers.”
She added: “Nurseries and other childcare providers remain in a very uncertain position with some still not able to re-open and others only seeing a fraction of children returning.
“With a lack of insurance cover, limited access to Government support schemes and chronic underfunding of childcare places we know that some nurseries have asked parents for contributions to keep their businesses afloat.
“If nurseries don’t have the income to cover their ongoing costs then they won’t be able to remain open for parents going back to work and it will be the families and children who will suffer in the long term.”