UK watchdog to investigate parents' complaints against nurseries over fees

The Competition and Markets Authority (CMA) is investigating reports of businesses failing to respect cancellation rights during the coronavirus pandemic.

The watchdog has set up a Covid-19 Taskforce to monitor market developments and identify the big problems facing consumers.

The CMA said it has seen increasing numbers of complaints in relation to cancellations and refunds, which now account for four out of five complaints being received, with weddings and private events, holiday accommodation, and nurseries and childcare providers the three main sectors of concern.

Complaints included that nurseries were asking people to pay very high sums in order to keep a place open for their child, people being pressured to accept vouchers for holiday accommodation that can only be used during a more expensive period, and wedding venues refusing to refund any money and telling people to claim on their insurance.

Andrea Coscelli, CEO of the CMA, said, ‘Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. We are now seeing cancellation issues in their thousands. So far, the CMA has identified weddings, holiday accommodation and childcare as particular areas of concern.

‘The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumers should be deprived of their rights at this difficult time. If we find evidence that businesses are failing to comply with consumer protection law then we will take tough enforcement action to protect those rights.’

'Many nurseries waiving fees'

But sector organisations hit back at the claims, saying that most nurseries were waiving parents’ fees during the crisis, despite the terms of their contracts, and that it was likely to be only a minority of settings that were not acting reasonably.

While some nurseries have been asked to stay open for parents of key workers and vulnerable children, others have been forced to close, with many unable to cover their costs and being 'pushed to the brink'.

They also said that nurseries were heavily reliant on Government funding, and had been underfunded for many years.

The National Day Nurseries Association pointed out that nurseries were also unable to claim on their insurance for any losses.

Purnima Tanuku, chief executive of NDNA, said, ‘Nurseries are being put between a rock and a hard place during this crisis. They are being asked to remain open and run at a loss to provide emergency childcare, while those who can’t open still face staffing and other costs which the Governments support doesn’t fully cover.

‘As a result of a lack of insurance cover, delays 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.

‘Nurseries as consumers have their own concerns especially about how insurance cover is working for them as this is leaving them exposed to losses. We have also raised concerns with the CMA previously about how Government funding is affecting the childcare market which is already pushing them to the brink. Before this crisis more than half were only breaking even or running at a loss.

‘If nurseries don’t have the income to cover their ongoing costs then they won’t be able to re-open when parents come to going back to work. If these measures - combined with a lack of Government support - force more nursery closures it will be the families and children who will suffer in the long term.’

Commenting, Neil Leitch, chief executive of the Early Years Alliance, said, ‘The Government has asked that childcare providers are “reasonable and balanced in their dealings with parents” during the coronavirus outbreak, and we are proud to see that this has been the approach taken by the vast majority of nurseries, pre-schools and childminders to date. We know that many early years providers are waiving parent fees during this crisis regardless of the terms of their parental contracts, and despite the negative financial impact this is likely to have on their settings.

‘Any instances of settings taking an unreasonable approach to parental fees would be likely to represent a tiny minority of the sector as a whole. What's more, it is important that the CMA takes into account the fact that, unlike the holiday and wedding industries, the childcare sector is heavily dependent on government funding, and this funding has been inadequate for years. This has put a huge pressure on providers trying to remain sustainable, and especially during this incredibly challenging period.

‘It is vital that any review of childcare practices takes these factors into consideration, and the Alliance would be very happy to support the CMA to gain a full and comprehensive understanding of these issues to ensure that the upcoming investigation is balanced and well-informed.’