Nurseries and childminders told to offer parents a refund if they paid during lockdown - here’s why

Many childcare providers were closed during lockdown, but some parents still paid for their services despite nurseries not operating or their child being unable to attend (Photo: Shutterstock)

Many childcare providers were closed during lockdown, but some parents still paid for their services despite nurseries not operating or their child being unable to attend.

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However, childcare providers are now being told that they must offer refunds to parents who continued to pay while their child remained at home and were not happy with the arrangement.

Parents being charged high fees

The Competitions and Market Authority (CMA) recently issued guidance regarding childcare fees after alleged practices of concern came to their attention.

This advice is primarily aimed at nurseries and early years settings in relation to their agreements with parents who privately funded their childcare places during the Covid-19 pandemic restrictions.

The CMA explains that the purpose of this advice is to assist businesses during the crisis, by helping them comply with consumer law and thus reach fair agreements with parents.

The advice is also of interest to parents and carers who use the services of nurseries and early years providers.

The CMA said: “Whilst the vast majority of businesses sought to reach fair arrangements with consumers during the COVID-19 crisis, this advice was produced in response to alleged practices of concern that have come to the attention of the CMA.”

This includes:

  • providers charging high fees for nursery and early years services which they were unable to carry out
  • providers relying on unfair cancellation terms in their contracts
  • providers putting unfair pressure on parents to agree to make payments not provided for in their contracts

Can parents or carers get refunds?

The CMA explains that due to public health restrictions during the lockdown period, the government’s guidance was that registered early years providers, including nurseries and early years businesses, should close except for vulnerable children and those of critical workers.

A large number of complaints that have been made to the CMA have been from parents or carers whose children could no longer attend nursery or an early year setting.

Many have alleged that providers “continued to demand full ongoing payments, or payment of a very high percentage of normal fees (more than 50%+) during the lockdown period.”

However, the CMA explains that in the case of ongoing contracts, such as the provision of early years childcare which is provided over a long period, their view is that:

  • the consumer should not normally have to pay early years providers for childcare services that cannot be provided for a period for any reason
  • a term requiring a consumer to continue to pay when the trader is unable to or is otherwise not providing any service is likely to be unfair and unenforceable
  • consumers should be offered a refund for childcare services paid in advance which are then not provided by the business because of those restrictions, and no further demands for payment should be made until it is clear that the service can resume
  • consumers should not have to pay for temporary breaks in the service, where the childcare provider is not in a position to actually provide care

Gordon Ashworth, CMA Consumer Group director, wrote: "Despite the financial pressures caused by the crisis, providers should not demand that consumers should pay high fees by warning that if they do not pay the fees the business will cease trading and/or livelihoods will be lost.

"To do so may breach consumer law."

Different guidance may vary depending on contracts and services, so it’s worth taking a look at the CMA’s guidance to find out more.