Nurseries, childminders and kindergartens that charged full fees during the closure are under increasing pressure to reimburse parents after an industry watchdog considered it unfair to charge for services that were not provided.
The Competitions and Markets Authority wrote a open letter for the industry in the early years this week, warning that during the height of the Covid-19 pandemic, they might face legal action from parents over “illegal and unfair practices”.
The watchdog said they tried, among other things, to pull the hearts of parents with threats of closure or children who would lose a place if they didn’t pay when closing.
However, two nursery owners have backfired, saying it would have been a fight for survival without asking for parent support during shutdown.
Are nurseries on the mischievous step now? The CMA has said that parents have the right to request a refund through the courts
Lucy Lewin, founder of Little Angels in Uppingham, East Midlands, said she charged parents 20 percent of the usual cost of keeping her head above water, while Suzanne Fowler, who owns two nurseries in Kingston, London, believes is that the sector should have received more public support.
The CMA said the letter was written to help early-years providers understand how consumer protection laws apply to the arrangements they have with parents during the Covid-19 pandemic, then described some of the dishonest practices for which it committed its had warned to act.
It said, “The crisis has highlighted the importance of providers ensuring that their contracts meet consumer law requirements and that they recognize consumers’ rights in the current situation.”
Why did the CMA focus on the tree nursery sector?
In March, the CMA set up its Covid-19 Task Force, which would monitor market developments during the pandemic and identify trading practices that would have adverse effects on consumers.
From there, it would consider appropriate responses to help companies comply with the law and consumer rights.
It said it had received reports reporting some unfair practices by a minority of daycare centers and early childhood providers, mainly regarding payments and cancellations during the Covid-19 lockdown.
I had to fight to survive
Lucy Lewin founder of Little Angels sent a letter to her Member of Parliament and the local government highlighting her struggle to keep her business running
The CMA letter was received with anger by some in the early years of the industry, with a nursery founder writing a letter to her MP and local government.
Lucy Lewin (pictured right), founder of Little Angels in Uppingham, claimed that her industry was as emotionally drained as public sector employees.
“We had to fight to survive. Yes, some of us have asked parents for help – I know.
“Yes, I said I would close without their help – because it’s a fact.”
Referring to the CMA letter and subsequent press coverage, Lucy added: “This kind of blow, this terrible prejudice for our industry, this slander is just another stab in the heart of us all, the majority doing what we do with integrity, compassion and love. ‘
She also criticized the prime minister for focusing on health rather than helping businesses in need.
She said, “If the prime minister really wants to help, instead of jogging or working his way out of the pandemic, maybe he should visit my environment and see for himself what passion, conviction, love, teamwork and sheer bloody determination look like.
“We are not a bad, greedy sector. We are overlooked, forgotten and tired. ‘
When asked if she would repay parents, Lucy said, “I haven’t made a decision at this point. I asked for a contribution of 20 percent and paid 99 percent.
“If I give money back to parents, I risk being shut down, as I’m only 15 percent occupied.”
This prompted the CMA to publish a statement on how the law applies to consumer contracts, refunds and cancellations, and announced that it would investigate early childhood care providers and providers as one of the three areas of care.
We are not a bad, greedy sector. We are overlooked, forgotten and tired.
Lucy Lewin – Little Angels
The CMA said it believed that “while the vast majority of suppliers strived to reach fair agreements with consumers in very difficult circumstances, concerns persisted with some who treated consumers unfairly.”
The CMA said it had no problem with companies and consumers who agreed to review their contracts or with parents who voluntarily agreed to continue making some payments as long as this was agreed reasonably and without any pressure.
However, not everyone in the tree nursery sector arranged their affairs fairly.
The CMA warned, “Consumers should not be forced to agree to new terms and conditions that allow the company to impose new conditions or raise unreasonably high prices are likely to be unfair and not binding on consumers.”
Three problems in the tree nursery
1. Providers claiming full or excessively high fees for services not performed due to the public health pandemic and government guidelines.
It says, “We believe that consumers should not have to pay for services that cannot be provided. Consumers should receive a refund when services are prepaid but not as agreed in the contract.
“Contract terms where consumers are paid to providers who fail to provide the services agreed in the contract are likely to be unfair and unenforceable.”
2. Providers who rely on unfair cancellation conditions or high cancellation fees when the company is unable to provide service.
The CMA explained, “In general, notice periods and cancellation fees may be appropriate in normal circumstances, if the company is still able to provide a service, but the consumer decides he no longer wants to receive it.
3. Providers who put unfair pressure on consumers to agree to payments by threatening to lose a child’s place or bankruptcy.
The CMA stressed that, in its view, resorting to these threats was “an unfair and illegal practice.”
It added that parents were warning that the company would stop trading in violation of consumer law.
Will there be an enforcement action?
The CMA said it will continue to monitor the sector but will not announce enforcement measures at this stage.
But it added, “If providers fail to comply with the rules, they may risk action by the CMA or another enforcer under consumer protection laws, such as local marketing standards.
Some said they would pay the full amount, which we did not accept. They didn’t have to pay, it’s not right to pay for something you don’t use, but we had no choice.
Suzanne Fowler – Flowers Day Care
“Regardless of any action the CMA may consider, providers should be aware that consumers may take action, possibly through the courts, to challenge breaches of contract and terms they believe are unfair.”
Even though the childcare sector can now open its doors again, it still takes effort to make ends meet.
A report released this month by Ceeda, an independent research company focused on childcare, shows how the industry continues to struggle with occupancy.
It said that while nearly nine in ten providers were open to families in the week starting July 6, the average occupancy rate only rose by three percent from the previous week to 48 percent.
It added that four fifths of the childminders had opened their parent facilities, but the occupancy rate remained at 35 percent.
Parents also struggled during the pandemic with a lot of leave, layoffs or had to work full-time while teaching their children at home.
Parents who pay to childcare voucher schemes also did not receive a refund from their employers, despite the fact that they could not use the vouchers during the lock.
Some have accumulated a balance of over £ 1,000 but have been told they cannot be refunded.
However, the HMRC has stated that the employer decides on the repayment.
Parents saved my company, while the government and insurers did nothing
Suzanne Fowler, owner of two childminder companies Flowers Day Care and Little Flowers in the London borough of Kingston, employs 11 people with a salary cost of nearly £ 4,000 a week.
She said they were almost ready to close the company at no cost.
“We tried to claim two insurance policies – the virus is new, so they both said they wouldn’t cover our forced closure because Covid wasn’t in the insurance documents.
“We examined all grants offered – we were not eligible for any of them.”
Since the costs would still continue during the closure, Suzanne says she wrote to parents to request two weeks full reimbursement, followed by four weeks half costs.
“We did say that if we don’t receive any fees, we may not be able to take your child back if we reopen.
“This was not a threat, it was the truth, and we were completely honest about it.
“We sat and cried like her [parent] after another told us they would support us, save us.
“Some said they would pay the full amount, which we didn’t accept. They didn’t have to pay, it’s not right to pay for something you don’t use, but we had no choice. The government should have saved us, but they did not.
‘The government has changed the rules for childcare providers, so that we could not fully develop our staff, we had to contribute part of it ourselves.
“I cannot express how grateful I am to our families; They saved our company and we will use all our energy to repay them by providing the best for their children until they leave us. ‘
Suzanne Fowler’s Little Flowers nursery in the Kingston neighborhood ran the risk of being closed if it didn’t receive financial support from its parents
Essentials for small businesses
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