Complaints on holiday accommodation and nursery refunds probed

30 April 2020, 13:24

Money
Competition and Markets Authority. Picture: PA

The competition watchdog said cancellations and refunds account for four in five complaints being received by its Covid-19 taskforce.

Complaints about nurseries and childcare providers, wedding companies and those offering holiday accommodation failing to refund people for services not provided are being investigated by the competition watchdog.

The Competition and Markets Authority (CMA) said complaints around cancellations and refunds account for four in five of those being received by its Covid-19 taskforce, which monitors market developments and identifies the big problems facing consumers.

Concerns include businesses refusing refunds or firms pressuring people to accept vouchers for holiday accommodation, which can only be used during a more expensive period.

The watchdog said consumer rights cannot be ignored.

Businesses should also not be profiting by “double recovering” their money from the Government and customers, the CMA added.

If it finds evidence that companies are failing to comply with the law, the CMA will take enforcement action, including moving quickly to court if a firm does not address its concerns.

Customers can also take their own legal action against unfair terms.

The CMA said it has identified three sectors of particular concern – weddings and private events, holiday accommodation, and nurseries and childcare providers.

It will tackle these areas as a priority and then move on to other sectors, based on the information received by the taskforce.

However, it added that most businesses are acting reasonably in what are unprecedented circumstances, and the crisis is placing everyone under pressure.

The CMA also outlined its views on consumer protection law in relation to cancellations and refunds during the crisis.

For most consumer contracts, the CMA would expect a full refund to be issued where:

– A business has cancelled a contract without providing any of the promised goods or services

– No service is provided by a business, for example, because this is prevented by lockdown restrictions

– A customer cancels or is prevented from receiving the service, for example, due to lockdown restrictions

Martin Lewis
Martin Lewis said the CMA’s guidance is welcome, although enforcement action is likely to be needed (Steve Parsons/PA)

Martin Lewis, founder of MoneySavingExpert.com, said: “These Competition and Markets Authority guidelines effectively say it doesn’t matter what’s in the contract – if you’re not delivering the goods or service to customers, they have rights, and they should be given a full refund.

“However, while this is welcome guidance, often even when rights are clear-cut, consumers have no way of enforcing them, other than starting court action – which is in no-one’s best interest. How can you force a firm to give you a refund when it simply says no, regardless of the law? So ultimately enforcement action is likely to be needed.”

Andrea Coscelli, chief executive of the CMA, said: “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 consumer rights can fall by the wayside. If we find evidence that businesses are failing to comply with consumer protection law then we will get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so.”

If people have been affected by unfair cancellation terms, they can report them to the CMA using an online form at coronavirus-business-complaint.service.gov.uk.

While the CMA cannot respond directly to every complaint, the information provided will help decide which issues to address as part of its work.

Adam French, a consumer rights expert at Which?, said: “We’ve heard from many distressed people who risk being left out of pocket for significant sums of money as they struggle to get refunds for cancelled weddings, private events or holiday accommodation.

“It’s right the CMA investigates sectors that are skirting their legal responsibilities on refunds and cancellations by trying to rely on unfair and unenforceable terms and conditions.

“The regulator must be prepared to step in and take strong action against any businesses found to be breaching consumer law and taking advantage of consumers during these unprecedented times.”

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said: “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.

“Nurseries as consumers have their own concerns especially about how insurance cover is working for them as this is leaving them exposed to losses.

“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 reopen 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.”

Neil Leitch, chief executive of the Early Years Alliance, said inadequate funding has put huge pressure on providers, “especially during this incredibly challenging period”.

By Press Association

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