Important Update on CMA Review of COVID-19 Cancellations and Refunds

Important Update on CMA Review of COVID-19 Cancellations and Refunds
Since the publication of the Competition and Market Authority’s (CMA) guidance earlier this week, we are aware that there have been a number of misleading and factually incorrect reports in the press, on websites, social media channels and also that some childminders have already been contacted by parents asking for a refund for services not provided during COVID-19. 

SCMA along with colleagues in PACEY and NDNA have contributed to the CMA review and the development of the guidance and continues to be in contact with the CMA regarding this. As such, we believe it important to provide some clarity at this time.

If a parent/carer approaches you requesting a refund before you have had a chance to familiarise yourself with the detail of the guidance or to seek advice please do not feel under pressure to respond immediately; acknowledge their communication courteously, that further advice and clarity is expected shortly regarding this and you will provide an informed response to them as soon as possible. While it is appropriate that consumers have rights, it is also important and only fair that as a childminder and business owner you have time to consider the detail around this.

The first thing to be aware of is that the CMA has made clear that it believes that the vast majority of childcare providers have acted appropriately during COVID-19.  The main focus of its review and guidance has been on where full (or unreasonably large) payments were required from parents during COVID-19 for services not provided and where refunds have been denied – with the intent of ensuring business practices are fair and within consumer law.

The CMA has also confirmed that it will not take enforcement action against the childcare sector at this time and has issued advice to the sector on staying within the regulations and understanding their obligations, so that parents and providers get the best results. This is mainly aimed at establishing principles for future practice in the event of a recurrence of COVID-19 and further extended forced closures, but may have some potential refund implications retrospectively where full payment was required. 

It is also very important to be clear that the CMA guidance is COVID-19-specific and, contrary to some incorrect reports, does not have any bearing on the appropriate use of voluntary and fair/proportionate retainers in normal business practice.  

The CMA has made clear in its open letter to the sector and guidance (see links below) that it is unlikely to object where payments have been made on a voluntary basis by parents/carers (such as where SCMA encouraged reaching voluntary and mutual agreement on an individual parent/carer basis during forced closures caused by COVID-19) and of low level retainer fees charged during this period or during future extended forced closures. In such cases refunds would not be expected. The CMA has helpfully clarified that it is not calling for refunds to be made across the board, but depending on the facts of each case some parents/carers could potentially pursue a claim if they believe there has been a breach of consumer law. In most circumstances, childminders should not feel under pressure as a result of this guidance.  

We are working with the CMA to clarify a number of aspects within the guidance, and with PACEY and NDNA to provide members and parents with information on what the new CMA advice means for them which we will share with you as soon as possible.

SCMA had also been awaiting the publication of this guidance to determine if any future contract changes would be required. We will update members about this shortly.

Read CMA's Open Letter to the Early Years Sector
Read the CMA Guidance/Advice in full