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.
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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.
Your rights during the coronavirus crisis
THESE are your refund rights during the current coronavirus crisis according to guidance issued by the CMA.
In most cases, the CMA would expect a full refund to be offered if:
- A business has cancelled a contract without providing any of the promised goods or services.
- No service is provided by a business, for example because this is prevented by restrictions that apply during the current lockdown.
- A customer cancels, or is prevented from receiving any services, because of the restrictions that apply during the current lockdown.
For customers that have already received some, but not all, of the services they paid for, a refund should be expected for value of the goods not received, the CMA says.
However, if customers have received something of value, they would generally be expected to pay for it and will not usually be entitled to all their money back.
Where a customer pays a fee for an ongoing service, the CMA expects refunds to be issued for:
- Services that have already been paid for but are not provided by the business, or services that can't be used by the customer because of coronavirus restrictions. This may be a partial refund to reflect the value of the services already provided.
- Customers will normally be allowed to withhold payment for services that are not provided, or services that can't be used by the customer because of coronavirus restrictions.
Business may be allowed to ask for a small contribution to its costs until normal services resume, but only where the contract terms set this out clearly and fairly.
Businesses can accept payments for future bookings, but only for services that it knows it can provide.
Credits and re-booking
Customers shouldn't be pressured into accepting vouchers over cash refunds from businesses.
If a credit note is received, it should be available to use under the same terms as the original booking.
The CMA says it understands that refunds may take longer than usual, but businesses should still be expected to process payments in a timely manner.
Non-refundable payments and fees
Refund rights will apply even for non-refundable services.
The CMA says businesses should also not be expected to apply an admin fee to process refunds.
How do I complain?
If you think you've been affected by an unfair cancellation during the coronavirus crisis, you can report a firm to the CMA by using this online form.
The government ordered all schools and nurseries to close down in 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 COVID-10 lockdown.
Nurseries were only allowed to charge fees during this period if it provide the services parents paid for via other methods, such as online learning.
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."
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