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CMA will not be taking any action against early years sector

By Rachel Lawlerfamily with baby CMA early years

The Competition and Markets Authority (CMA) will not be taking any action against the early years sector, following an investigation into providers' response to the coronavirus pandemic.

The investigation was trigged by reports of "unfair practices" by some providers, mainly referring to payments during periods of closure as a result of lockdown restrictions.

In an open letter to the sector, the CMA said that it had found that while most providers were making fair arrangements with consumers, there were some that had treated parents unfairly.

The CMA said that it would not be taking any enforcement action against the early years sector "at this stage". However, it said that it would continue to monitor the sector.

Consumer law
The letter reminds providers that if they are not compliant with consumer law, they "may risk action by the CMA" or other enforcers of consumer protection law, such as local authority trading standards.

With many providers now reaching new agreements with parents following the outbreak, the CMA has provided advice for the sector to help ensure that consumers are treated fairly.

Common concerns
The CMA identified three key areas of concern:

  • providers requiring full or "excessively large" fees for services not being carried out due to the pandemic
  • providers relying on unfair cancellation terms, such as requiring unreasonable notice or high cancellation fees
  • providers putting pressure on parents by threatening that the child's place may be lost or that the provider will go out of business

The CMA said that while it recognises that most early years providers were "trying to do the right thing under unprecedented circumstances and pressure" it also believes that parents "deserve to have their rights protected".

The CMA asks providers to "consider their contacts" and arrangements with parents and take any necessary steps to ensure that they comply with the law.

Neil Leitch, chief executive of the Alliance, commented: "We know that despite the huge challenges childcare providers have faced over recent months, the vast majority have been wholly fair, reasonable and balanced in their dealings with parents and we are glad that this has been recognised by the CMA.

"We also welcome their acknowledgement of the significant financial pressure that childcare settings have faced which, as we know, are the result of years of inadequate funding. Given how vital the early years sector is to society as a whole, 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."

Find out more
CMA investigates childcare sector
Read the CMA's letter to the sector

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