When Your Nursery, Childminder or After-School Club Closes: Your Rights

Your contract with a nursery, pre-school or childminder is a private contract for the supply of services, governed by the Consumer Rights Act 2015 (services must be performed with reasonable care and skill, within a reasonable time, and for a reasonable price unless otherwise agreed). When a provider closes — whether voluntarily with notice, after losing Ofsted registration, or because of business insolvency — they are in repudiatory breach of the contract for any period after closure. You are entitled to a refund of fees paid for any period the service will not be delivered, and to damages for any additional cost of obtaining equivalent care elsewhere (though damages claims are rarely worth the cost of pursuing). The practical problem is collecting the refund: a closed provider with no assets cannot pay, and parents become unsecured creditors in any insolvency. This is why the Section 75 and chargeback routes (covered below) matter so much.

If you paid your childcare fees by credit card and the transaction was between £100 and £30,000, Section 75 of the Consumer Credit Act 1974 makes the card issuer jointly and severally liable with the supplier for any breach of contract or misrepresentation. Once the provider closes and cannot deliver the service, you can claim against the card issuer for the prepaid fees. The card issuer cannot refuse on the grounds that you should try the provider first — they are joint liability. Contact the credit card customer service line, explain the closure, and request a Section 75 claim. If the transaction was on a debit card or under £100 on a credit card, ask for a chargeback under the Visa/Mastercard scheme rules — chargeback is not a legal right but it is the routine industry mechanism for reversing transactions where services were not delivered. File the chargeback request within 120 days of the date you knew or should have known the service would not be delivered (Visa) or 120 days from the transaction date (Mastercard).

Funded childcare entitlement — 15 universal hours from age 3, 30 working-parent hours from age 3 and 9 months, the new working-parent hours for under-2s introduced from April 2024 and expanding through 2025 — is administered by your local authority but the entitlement belongs to your child, not the provider. When your provider closes, the entitlement is not lost. Contact the council's Family Information Service immediately and explain the situation. The council should: (a) help you find a new registered provider with capacity; (b) reissue your funding code if needed; (c) ensure the funded-hours payment that would have gone to the old provider is redirected to the new one for the relevant period. Section 6 of the Childcare Act 2006 imposes a statutory 'sufficiency duty' on the council to secure sufficient childcare for working parents and parents accessing free entitlement — if there is not enough capacity in your area, the council must commission or stimulate new provision. Failure to perform the sufficiency duty can be challenged through the council's complaints procedure and ultimately the Local Government and Social Care Ombudsman.

Provider misconduct in the period leading up to closure — neglect, sudden closure without notice, safeguarding breaches, retaining fees in bad faith — should be reported to Ofsted. Ofsted regulates all early years and childcare provision in England, with separate routes for nurseries, pre-schools, childminders, after-school and holiday clubs. Reports can be made anonymously at ofsted.gov.uk or by phone on 0300 123 4666. Ofsted can investigate and, in serious cases, suspend or cancel registration — but Ofsted does not have the power to order a refund or compensate parents. For that you need the contractual route (small claims or Section 75/chargeback). In Wales, equivalent regulation is by Care Inspectorate Wales. In Scotland, Care Inspectorate. In Northern Ireland, the Health and Social Care Trust early years team.

Speed matters. The Family Information Service in every council holds a register of vacancies. Online services like childcare.co.uk and your local Family Hub list spaces. Larger nursery chains can sometimes accept emergency placements with priority for displaced families. Childminders often have more flexibility than nurseries. If you have a child with SEND, your Local Offer page on the council website lists settings with specialist capacity. If the closure left you without childcare and you cannot work, contact your employer about emergency leave — section 57A of the Employment Rights Act 1996 gives you the right to take unpaid time off for dependants in unforeseen disruption to childcare arrangements (covered in our 'Time off for Dependants' guide). If you receive Universal Credit, you can claim the childcare element for the new provider as soon as you start paying fees.

Complaints split by topic. Provider conduct or quality: Ofsted. Provider refund refusal: small claims court (online, free if under £35,000; you can sue in your own name without a solicitor) or Section 75 claim against your card issuer. Council failure to support transfer of funded hours or sufficiency duty: the council's own complaints procedure first, then the Local Government and Social Care Ombudsman (free, independent, can recommend compensation and policy change). Department for Education / Childcare Choices technical issues (eg. funding code does not work, Tax-Free Childcare account problem): the gov.uk childcare service helpline on 0300 123 4097. If a provider was running a Tax-Free Childcare account and money is stuck in it after closure, contact HMRC immediately — the £2,000-per-child cap is annual and unused balance from a closed provider does not roll forward automatically.

Keep copies of: your signed contract, every fee invoice, your payment method (card statement showing the charge), any written notice you received about closure, any safeguarding incident report you raised, any Ofsted inspection report for the setting (the last 3 inspections at minimum), and any communications about the funded hours arrangement. Red flags that often precede closure: repeated late staff payment, falling Ofsted ratings (from 'good' to 'requires improvement' is a warning), price rises significantly above the council's funded-hours rate, sudden changes in ownership or registered manager, parent WhatsApp groups reporting concerns, late or missing meals, deterioration in the physical premises. If you see two or more of these, start looking for alternative provision now — even if you stay, having an alternative ready saves weeks of disruption if the worst happens.