The UK’s competition watchdog is investigating nursery and childcare providers for allegedly failing to issue refunds in light of widespread site closures enforced by government in response to Covid-19.

The Competition and Markets Authority (CMA) is looking into reports of nursery operators failing to respect cancellation rights throughout the Covid-19 pandemic, which forced most nurseries across the UK to close in mid-March.

According to Nursery World, complaints have been made that nurseries are charging “very high sums” to keep places open for children.

According Nursery World’s report, the CMA has established a taskforce that will monitor market developments, as the watchdog has cited rising numbers of complaints related to cancellations and refunds, which now comprise four in five of all complaints received.

Childcare – along with weddings and private events, and holiday accommodation – is among sectors of primary concern to the CMA, it said.

Andrea Coscelli, chief executive 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.”

However, British nursery businesses have hit back at the CMA’s warning, claiming that the majority of nurseries had waived fees, despite stringent contract terms, and suggested that only a small number of providers had acted out of line.

Purnima Tanuku, chief executive of the National Day Nurseries Association, 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 government’s 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.

“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.”

Date published: 5 May 2020

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