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29 July 2020, 10:28
Parents should be refunded if they paid for childcare during lockdown and couldn't use it.
Nurseries have now been told they must offer refunds to parents who have been paying for services that couldn’t run during lockdown.
Since childcare businesses were forced to close back in March, a high number of families have issued complaints over the ‘unfair’ charges they are still receiving.
In a bid to tackle the issue, now the Competitions and Markets Authority (CMA) has issued a warning to childcare providers that they could face legal action if they continue to force payments.
Under existing consumer rules, parents shouldn’t pay for services that cannot be fulfilled and should be offered a refund where services are paid for in advance but do not take place.
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."
In an open letter to childcare providers, the watchdog warned that nurseries, pre-schools and childminders are not allowed to tell parents their child’s place is at risk if fees aren’t paid.
It also states that contract terms requiring consumers to continue paying providers even when they are are not providing a service are likely to be ‘unfair and unenforceable’.
This comes after Which? found that around 30% of parents were paying up to full price to keep their children signed up to a nursery during the lockdown.
While nurseries are allowed to charge small fees for services such as online learning, the fees should have been reduced to cover just the immediate costs.
These should not be used to pay for things such as rent, that could be covered by government financial support schemes.
Neil Leitch, chief executive of the Early Years Alliance, added: "No provider should have ever been put in a position where they were forced to ask parents for the financial support they should have been getting from the Government.
"With more local lockdowns - or even a second coronavirus wave - widely expected, there is a real possibly that childcare providers may be ordered to temporarily close once again, meaning another huge drop in parental income for already-struggling nurseries, pre-schools and childminders.
"It is vital, therefore, that the Government commits to giving the sector the financial support it needs, when it needs it - otherwise, we risk seeing many more childcare providers being forced to shut their doors for good."
Parents can make a claim against a nursery if they believe they have not followed the regulations correctly during lockdown.