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In brief

The Competition and Markets Authority (CMA) has published guidance and an open letter for businesses operating within the nursery and early years sector. This comes as a result of the CMA’s COVID-19 taskforce receiving a significant amount of complaints since March 2020 from consumers (parents and carers) in relation to the practices of nurseries and early years providers.


CMA Guidelines

Businesses in the sector should take account of the following guidelines:

1. Terms requiring consumers to make considerable payment for services not provided during lockdown are considered unfair and invalid

Consumers should not ordinarily have to pay for childcare services that cannot be provided for any reason, including temporary breaks in the business due to COVID-19. Consumers must have had the opportunity to read the terms of service for them to be legally valid. However, even if contract terms were agreed, terms that are considered unfair under the Consumer Rights Act 2015 (CRA) will not be legally binding.

2. Aggressive cancellation fees or lengthy notice periods as a barrier to prevent consumers from exercising choice is likely considered a breach of professional diligence under s. 63 CRA 

Notice periods and cancellation fees may be appropriate if:

  • the notice period is reasonable;
  • no further cancellation fees are charged where the parent keeps their child in the early years setting during the notice period; and
  • where the child is removed from the early years setting, the fees are reduced to take into account savings the setting can reasonably expect to make (such as savings on food).

3. Under Sch 1 CRA, it is unfair for businesses to pressurise consumers to continue payment by either i) threatening that a place might be lost or ii) suggesting that the business will go under if consumers do not continue to pay

Unless the business is facing a clear risk of insolvency in the view of an accountant, the CMA objects to businesses making these statements as a basis for payment, and considers that such statements may be in breach of consumer law. Furthermore, businesses should make it clear that there is nonetheless a risk of not re-opening despite continued payments from consumers.

How can businesses within the nursery and early years sector adapt to COVID-19 related issues whilst maintaining compliance with consumer law?

  1. Small contribution towards costs – the CMA is unlikely to find a term unfair or object to it if a business makes a request for small contributory payments to cover costs during the service disruption period.
  2. Mutual agreement – businesses and consumers can agree to i) revise their obligations under the contract; ii) suspend the contract; or iii) voluntarily make small contributions to the business.

Recommendations for businesses within the nursery and early years sector

Whilst the CMA has stated in its open letter that it is not planning to announce any enforcement action at this stage, businesses should be mindful that this sector remains in focus and will be monitored closely. In addition, individual consumers also have the option of pursuing a legal claim against businesses for alleged breaches of consumer law.

As an initial step, providers of early years services should conduct a review of contracts with consumers to ensure compliance with consumer law. Businesses should also ensure that any arrangements with consumers, including payment requests or the imposition of cancellation fees, are within the scope of the guidelines.


Julia Hemmings is a partner in Baker McKenzie's IT/Commercial Group based in London. Together with Helen Brown, Julia heads up the Consumer and Commercial Advisory Practice. Julia joined the Firm in 2001 and also worked in the Sydney office from March 2006 to March 2008.


Helen Brown is a partner in the London IT/Commercial Department. Together with Julia Hemmings, Helen heads up the Consumer and Commercial Advisory Practice.


Fleur is an associate in Baker McKenzie’s Intellectual Property and Technology team, based in London. She joined Baker McKenzie as a trainee in March 2017 and was admitted as a solicitor of England and Wales in March 2019. Fleur’s practice encompasses aspects of commercial, technology and intellectual property law.