Childcare Centres Taking Bond Payments from Individuals/Families

Hello to all

I really would like to get a gauge on this topic and see what people's opinion is on this. You dont need to be a parent, use some basic logic and common sense

A childcare centre that I have recently enrolled my son into has taken a bond payment from me. It's not as though i wanted to pay this, and I am very uncomfortable with it, however the childcare centre would not take an enrolment without this bond payment.

As a guide, the bond payment taken per day is $125 and you need to pay 2 weeks in advance. So, if you have your child in childcare for 4 days a week then it $125 x 4 ($500) and then double this as you need to pay weeks in advance, so a $1000 bond if you have your child in childcare for 4 days per week.

Lets assume the childcare centre capacity is 100 children, and they are all in 4 days per week. So now, the childcare centre is holding $100,000 of individuals and families money. It is not controlled, it is not policed, it is not governed in any way. Nothing.

I want to question this as I do not feel it is at all appropriate, or legal.

A childcare business is not in the business of managing funds, which is essentially what they are doing by taking bond payments from parents. They are in the business of childcare.

They are not an ADI (https://www.apra.gov.au/register-of-authorised-deposit-takin...), they do not hold an AFS licence (https://asic.gov.au/for-finance-professionals/afs-licensees/...) and they can not be allowed to take and hold money from individuals.

I do not want a childcare centre managing my money in any way, and that is exactly what is happening here. I could, and would, use this money to invest in cash or equities if it wasn't in the hands, or rather the bank accounts, of the childcare centre.

This bond payment held by the childcare centre is in no way guaranteed or secured, unlike a bond lodged with the RTBA for example (https://www.consumer.vic.gov.au/bondauthority).

What if this childcare centre goes into liquidation?

What are they doing with this money? Who would know?

These bond payments collected by the childcare centre, at the very least, I am sure, are earning interest on cash for which the owners of the childcare centre benefit, but the owners of the cash do not. It is obviously not right at all.

How can this be legal? This is my money, and someone else is benefiting from investing it under the guise of it being a "bond" payment.

If there must be a bond, which is extremely questionable to start with, then these bond payments must not be held by the childcare centres

There needs to be a system, exactly the same as the RTBA works for rental property

Poll Question: Is it right for childcare centres to take a bond?

Poll Options expired

  • 11
    Undecided/Indifferent
  • 90
    Yes
  • 176
    No

Comments

  • +1

    My understanding is that the practice is reasonably wide-spread, including with private or Catholic schools (although it may be labelled as a loan or similar).

    There would appear to be a risk for the customers, but if you are not comfortable with that arrangement I imagine that there are other providers who don't hold a 'deposit' or 'bond'.

    Payment of fees in advance seems reasonable to me.

  • +6

    I hate the payment in advance bullcrap, you basically have to run a spreadsheet across everyone you pay money to or you will lose your money by overpaying them when you stop using the services

    • +4

      Ive literally never paid a bond besides a rental property. My spreadsheet will be 2 lines after child care admission.

      • +1

        Wow didn't realise everyone was into this spreadsheet business

        • +3

          The spreadsheet never lies

        • +22

          Wow didn't realise everyone was into this spreadsheet business

          I excel at it.

          • +2

            @MrPants: Spreadsheet is the pivot of business' daily operation.

          • @MrPants: Hahahahahaha.. oh the dad jokes

          • +1

            @MrPants:

            I excel at it.

            I take your word.

            • +2

              @CocaKoala:

              I take your word.

              That's a power point!

              I like your outlook.

      • +1

        Potentially you could even have these two entries on the same line.

        • +1

          Saving excessive lines… Smart !

  • +20

    There are lots of parents who don't like to pay childcare bills. You have the option of going to another childcare if you don't like it. You have obviously weighed that up, and decided the benefit of this particular childcare outweighs the cost of having to pay the bond.

    • yes ive moved from one childcare to another. the previous did not ask for bond payment. the childcare centre is good. ive paid the bond.

      • +6

        So obviously in your area, people believe this one to be of better quality. And to ensure a tight enrollment and people don't just disappear mid way through a term, leaving empty spots in the rooms and money lost, they are using the deposit scheme as a way to reduce financial loss.

        It's really not much difference to a gym making you pay up front for the year, regards of how often you come in. Or a phone company locking you into a contract for a year, or anything else where you could decide to leave mid way and cause financial burden on the company because they have empty spots that they now have to fill.

        The more I try to find examples, the more I'm struggling to see how this is any different to almost everything you pay for in life.

        • +1

          This.

          Because childcare has strict parent to child ratios depending on age, having someone pull out last minute can have a significant impact on margins/profit and by forcing payments/bonds, it ensures they have stability in both fees and attendance.

          Flipping it around, if they didn't do this, and there was that risk, it would mean that all else being constant, they'd need to raise the price for everyone else to maintain the same risk adjusted return.

          Whether it's called a bond, prepayment, amounts paid in advance, etc… it's all fundamentally the same thing.

  • +2

    My childcare centre in Brisbane takes a $250 deposit to hold the place, and this is only refunded when we leave the centre and if we stay for 12 weeks or more.

  • -2

    It would be very useful to see a YES or NO in replies, indicating whether you think tis is right or wrong respectively

    Dictating the discussion huh? You must be fun at parties.

    I'd just choose to go elsewhere. Either a) that particular daycare is highly regarded, and worth the money, or b) there's another one just like it down the road without a bond.

    Choose with your feet, don't just choose to go on a legal crusade, or waste time even thinking about something which you have full control over. You have choice.

    • +2

      I saw that comment from OP and was so confused I didn't respond that way.
      YES = the argument put forward by OP is "right", or the behaviour of the child care centre is "right"?

      • is the taking of bond right, not is my opinion or argument right

        • +2

          If you want to see yes or no answers you should add a poll to the OP.

    • +5

      you may be content to have your own money placed into an unregulated and very risky environment, though I am not.
      i think the taking of bonds by childcare centres should be legislated, and the bond monies secured by a bond authority, meaning funds are held in trust.
      you are wildly overstating things with the legal crusade and time wasting remarks. not helpful to anyone.
      the childcare industry has grown dramatically, its very profitable, it is funded by the government and by individuals and families, theres alot of money flying around and it needs much tighter regulation and controls.

      • +3

        you may be content to have your own money placed into an unregulated and very risky environment, though I am not.

        the childcare centre is good. ive paid the bond.

        You sure about that?

        • -8

          why would i be here wheeling out lies. honestly. if youve got nothing useful to add, go away

          • +3

            @elefc: He is pointing out that you say you aren't content to have your money in a risky environment, yet you have paid the bond into said risky environment.

            • +2

              @brendanm: What's your point, brendanm? OP has stated that they don't feel content in having their money in a risky environment. That's a feeling. They aren't saying they haven't paid the bond.

              • @ThithLord: Then what does it matter? They have something you want, so you will do what is asked, as op has done.

                • @brendanm: You haven't elaborated what your point is, though. Your conclusion is illogical.

                  • @ThithLord: The point is, it's to look at things in isolation. Obviously the op has weighed up his options, and paying the bond is worth it to get into the centre. So either the centre is the best in the country, or his convictions aren't as strong as he says.

                    My conclusion is not illogical. They don't have to give op a place, and they dictate the terms of getting the place. If someone wants it, they agree to these terms, or go elsewhere.

            • @brendanm:

              He is pointing out that you say you aren't content to have your money in a risky environment, yet you have paid the bond into said risky environment.

              Hence the discontent lol

              • @trapper: He has the choice to not do it though, his discontent is entirely voluntary.

                • +1

                  @brendanm: Sometimes you get to pick your poison, but it is still poison.

                  • @trapper: There are plenty of centres available that don't take a bond, op even said that he previously used one. So no, there are other options.

                    Perhaps op has realised that the bond weeds out the undesirables, and thus the centre with the bond has a much better reputation, and is a nicer place to be at. If he had his way, and the bond condition was removed, it may end up like the other one they left.

                    There is also the option not to have kids in childcare, the option not to have kids, the option not to work. The possibilities are endless.

                    Childcare is a free market, it isn't like water supply, it isn't a necessity for life.

                    • +2

                      @brendanm: Yes, plenty of poisons, now pick one, are you content?

                      But.. but.. you chose it yourself, so you must be happy! … right?

                      • @trapper: Pretty much. I'd be happy if the childcare my daughter attends was to bring in this bond system.

                        • +1

                          @brendanm:

                          Perhaps op has realised that the bond weeds out the undesirables, and thus the centre with the bond has a much better reputation, and is a nicer place to be at.

                          Oh so now you're happy with your daughter attending a centre full of 'undesirables'. Gold man, gold.

                          • @trapper: It's not full of them, otherwise we wouldn't have gone there given the many options available. It would lower the number more though I suppose.

      • I don't think you should be trying to convince the ozbargain community. You should probably be trying to convince the child care centre of your concerns.

  • +1

    Most centres do this. This is just to ensure that you have enough money to pay your bills.

    • +2

      seems that many do, that is right. i say the the money should be held in trust, not by the childcare centre

      • +2

        Ok, feel free to pay extra for trust account administration costs. Or better yet, propose to the childcare that you'll provide a bank guarantee.

        It'll cost you about $100 in fees though.

        • -2

          if this was legislated and there was a bond authority for childcare centre deposits, there would be no fees.
          theres no fee for a tenant to haver their bond held by the RTBA, for example

          • @elefc: Not to you, but nothing's free. It would cost taxpayers.

            • @HighAndDry: The administration costs not all are from taxpayers but some come from the interest generated from the bonds. Childcare industry is big in Australia and if our government cannot afford administration costs to monitor the centre’s compliance on how bonds are handled then it might as well give up any regulation of this industry as a whole.

              • @wtfnodeal: What else do you want the government to "monitor compliance" with? Shops that have you pay first before they deliver?

                There's no issue here. OP hasn't lost any money, no one has stolen any money. Not everything needs government supervision.

                • @HighAndDry: If that is the case you can tell that to the government department that monitors the real estate tenancy bonds to deregulate the trust money compliance requirements too.
                  It is about how big are the stakeholders and stake holdings. Have you received this info about “no one has stolen any money” from a reliable source or just your assumption? “Shops that have you pay first before they deliver”, depends on the amounts involved say you won’t pay your builder 100% contracted sum upfront before the construction starts etc.

  • +7

    Per another users comment..
    There are plenty of people that are quite a bit behind in their fees.

    The issue is the centres do not know who will default. So a bond makes sense and will help reduce their losses. And limit fee increases to cover defaulting families.

  • +2

    OP - simples. You can use a service and abide by their terms and conditions, or you can choose to not use that service…….

    • -1

      yeah that's why we have a grand total of 0 laws regulating how companies conduct their business right /s

  • +1

    That Poll is absurd:

    "The bond money could be misappropriated because there is no legislation covering the taking of and t

    Should this practice continue

    The practice of some child care centres charging indivduals and families "bond payments" is unregula"

    • +4

      i made a mistake making the poll. the moderators fixed it up. relax

      you people here are way too fast to comment and criticize.

      way too fast

  • +2

    This bond payment held by the childcare centre is in no way guaranteed or secured, unlike a bond lodged with the RTBA for example (https://www.consumer.vic.gov.au/bondauthority).

    Is this even legal? I wouldn't agree to it. We were asked to pay in advance for our little one and that this amount would either be credited to our account or refunded ( less 20% admin fee) if we choose not to go with them.

    • This and the gender quota thread really is making me worried for you.

      this amount would either be credited to our account or refunded ( less 20% admin fee) if we choose not to go with them.

      This is still held by the childcare themselves, not in any kind of guaranteed or secured way (eg trust account, govt bond Dept, etc).

      • +2

        Sure. They were only going to hold onto it for 2 months rather than 2 years. In the end, we decided not to go with them . My employer was in the process of introducing employer-sponsored childcare in a bid to attract more female scientists. I am male but I was still able to take advantage of this perk, which I gladly did :)

        Edit: Why are you worried for me? Because I come across as being pro-women and pro-kids? Truth be told , I'm more of a humanist , than anything else.

        • There's no difference between a bond and an amount that's perpetually prepaid for the length of the contract. It's only a matter of degree and amount.

          • @HighAndDry: The amount was not to be perpetually prepaid. The $500 was to secure his place. If he had started at that daycare, it would have been credited to our account and used to pay for his 2nd fortnight fees. Like I said, we didn't go with them , so we never paid that deposit.

          • +1

            @HighAndDry: But you haven't answered my question : why are you worried for me? I did get a few PMs from other 'concerned' ozbargainers, mostly to tell me that I was a disgrace to my own sex and that they hoped I was made redundant and replaced by a less-competent female staff. Then there were the male supremacists, guardians of the patriarchy, who were less subtle in their threats…

            Somehow, I don't think you fall in either category. So genuinely curious as to why you are worried for me.

            • @DisabledUser102420: Oh, mostly reasoning. There's no reason a $150 bond for childcare (with potential for damage to property, non-payment, etc) would remotely be illegal.

              The gender quota stuff is at once more egregious (logically) but also understandable, since it's far more mainstream.

              • @HighAndDry: From the Op,

                So now, the childcare centre is holding $100,000 of individuals and families money. It is not controlled, it is not policed, it is not governed in any way. Nothing.

                Yet, the non-lodgement of the rental bond, which averages around 2% of this amount, can potentially result in penalties, fines and legal action. In WA, this fine can reach up to $20k. How is that not (logically) egregious?

                The gender quota stuff (…)

                Nobody is saying those quotas are a great win for women - the win would be removing the discrimination and inequality that creates under-representation in the first place. But in the short term, alongside other measures, they can be an effective way to make progress happen faster.

                As I have mentioned above, and in the other thread, I have also been enjoying the unexpected perks of working in a more diverse workplace such as access to gender-neutral parental leave, in-home help,employer-subsidised childcare facilities, better work-life balance, family-friendly WFH arrangements,flexible working hours, additional 5 days carer's leave, heavily subsidised-holiday care for my kids, salary sacrifice arrangements … etc Others could too if they were less insecure and more open-minded.

                • @DisabledUser102420:

                  Yet, the non-lodgement of the rental bond, which averages around 2% of this amount

                  This purely hypothetical amount…? From OP:

                  Lets assume the childcare centre capacity is 100 children…

                  So to answer:

                  How is that not (logically) egregious?

                  Because it's $500 per child (not the usual $1,000+ in rental bonds), for a perfectly logical reason (damage and non-payment), and there's no particular reason to fear that it would disappear.

                  • +1

                    @HighAndDry:

                    Because it's $500 per child

                    It's $125 per day. For a child attending daycare full-time, it would be ($125 x 5 x 52)/12 = $2708.
                    Some places ask for a full month bond.

                    there's no particular reason to fear that it would disappear.

                    More than 200 daycare centres have been shut down in the past 5 years in NSW alone It's the wild west out there. It's good that the government is ramping up the surprise inspections.

                    • @DisabledUser102420: OP didn't even mention that - just 4 days, being $500.

                      And just because they're shut down for safety reasons doesn't mean they're insolvent and can't pay their debts. The centre might disappear, the money will still (generally) be there.

                      • @HighAndDry:

                        As a guide, the bond payment taken per day is $125 and you need to pay 2 weeks in advance. So, if you have your child in childcare for 4 days a week then it $125 x 4 ($500) and then double this as you need to pay weeks in advance, so a $1000 bond if you have your child in childcare for 4 days per week.

                        Op's paid the equivalent of a fortnight fees ($1000) for a child who attends the daycare part-time.

                        • +1

                          @DisabledUser102420: Yeah and I see nothing wrong with it. We prepay and give bonds for stuff all the time.

                          I don't hear of childcare centres absconding with bond money much if at all, so to me this is all storm in a teacup level stuff.

                          • @HighAndDry: TBH, I'm not losing sleep over it either as we weren't charged bond.

                          • +2

                            @HighAndDry: @HighAndDry

                            I don't hear of childcare centres absconding with bond money much if at all

                            Actually there are many complaints regarding child care centres and their financial dealings with their clients. NSW Fair Trading had 118 complaints in 2019. Link

                            I feel the OP's argument that there could be up to $100k involved in unregulated 'bond' money at a single centre to be quite valid. The amount of 'bond' is arbitrary from centre-to-centre, even it's supposed purpose (deposit, holding money, to cover for non-payment, deterrent, penalty) seems to vary. This sounds very much like the bad old days of the rental market (before bonds were regulated), when landlords could be capricious and arbitrary in their use and abuse of bonds (or, as I always used to thin of them: bribes).

                            Further H&D, your argument that the amounts are small is pretty poor. Yes, to all us BMW driving, property-owning, OzB millionaires, $200, or $500, or $2000 may simply be kindling paper for the campfire, but to many (too many) people, it is a significant amount. And it is not as if child care is a luxury only for the idle rich.

                            As an industry one would imagine it would be in child care's best interest to have things like this completely above board, consistent and regulated. A good point was also made earlier that any costs associated with administering such a scheme would be amply covered by the income derived from the millions of dollars involved.

  • What do you mean by car had no insurance? Do you mean CTP ?

    • Wrong post? ;)

      • Yep and you replied before I could unpublish it .*sigh

        • +1

          I know :D

          Luuvvvv yooooo

    • Yes, I think Superman would beat Spiderman in a head to head battle.

  • +1

    I have 2 kids in childcare and this is pretty normal. Most centres we investigated had a 'pay in advance' requirement.

    I believe this is simply for cashflow reasons and probably a reaction against parents not paying (on time) in the past.

    I honestly don't see the big deal anyway. I must be too trusting, i regularly pre-pay my kids childcare fees on my credit card to hit earning requirements in one fell swoop for getting bonus points. lol. Its not like a couple of grand in childcare fees lasts very long anyway. It's nearly criminal how much we have to pay for our kids to be looked after.

    EDIT: Was just looking at my accounts and I pay approx $500 in advance for each child. SO the centre has about $1000 of my cash at the start of each week.

    • -2

      The real question is why do we need anyone to look after our kids

      • Yes

        • When will you people learn? In America we stopped using corporal punishment and things have never been better. The streets are safe, old people strut confidently through the darkest alleys and the weak and nerdy are admired for their computer programming abilities. So, like us, let your children run wild and free, for as the old saying goes, "Let your children run wild and free."

    • Advance payment is not really the issue though.

      You pay in advance and then over time your 'balance' ticks down to zero, then you pay in advance again - this is ok.

      • Call it a bond or advanced payment, same thing when you boil it down. Essentially the company holds your money in advance of your procuring their services.

        • +1

          It's not the same thing though.

          The bond balance never ticks down to zero, it's sitting there untouched the whole time.

          • @trapper: I understand it doesn't tick down, but it serves the same function as having to pay $1000 in advance. It's all just cash held in an account of the childcare company. And serves as the same security blanket against parents not paying on time.

            • @Skramit:

              I understand it doesn't tick down

              Good, so it's not the same thing then is it.

              It's an unnecessary 'security blanket'. If you haven't paid for today, then no child care today, how complicated is that?

              • @trapper: Still it functionally serves the same purpose as a security blanket for the company. Call it whatever you like. Semantics don't really matter in the event the centre goes bust and they still hold your cash. The risks are the same.

              • +1

                @trapper: Because you take up a spot, even if you don't show up, that they can't charge to another parent.

                • @HighAndDry: Exactly, it's not rocket science.

                • @HighAndDry: @HighAndDry

                  Because you take up a spot, even if you don't show up, that they can't charge to another parent.

                  So why not apply this principle to every business?

                  • I want to purchase some timber at Bunnings. I have to pay them a $100 bribe bond, and then pay the $1500 in advance for my timber. Only when I finish my construction do I get my $1000 back.

                  • I purchase my groceries at Coles. I have to pay a bond of $50, and then pay my trolley of $80. And it's only when I move address that I get my $50 back.

                  • I book a room at a West Wyalong motel. I have to pay a bond, just in case I don't turn up and the room does not get filled that night.

                  • I make an appointment at my local doctor surgery. They demand a bond of $50 because sometimes people don't turn up. The bond is returned to me when I move address.

                  Of course these are ridiculous points. I think sticking the child care situation in there would be equally as ridiculous. As a business is child care so special, so different to any other business? Why should they have different trading conditions? Why should they get a free pass for something that few other businesses do?

                  The answer: because they can. Because they get away with it. Because demand obviously exceeds supply in some areas.

                  Many other aspects of the child care industry are regulated; it seems anomalous that this is not. After all, they build their profits on the massive subsidies they get from the government, as much as on the fees they charge customers. If they were 100% totally private and accepted no government money per child, I would not feel so strongly. But as I am forking out here, then all of their financial dealings should be disclosed and industry-consistent and regulated.

                  • @Roman Sandstorm: What?

                    If you don't go ahead with buying the timber at Bunnings, they can still sell it to someone else.

                    If you don't show up with your kid to childcare, how do they sell that time slot later? With a time machine?!

                  • @Roman Sandstorm: That is completely nonsensical.

  • -3

    The whole industry needs a shake up and the GOV needs to stop subsidising parents.

    The subsidising has also played a role in the stupid house prices we have.

    • +1

      To be fair, one would argue that the government's only job is to subsidise parents. Everything else is foolish. The State needs to ensure we have a steady birth rate for tomorrow's generation. Everything else is secondary.

      That being said, Australia sucks at it, as do most countries. From what I hear from parents at work, the childcare business is a rort. It's only a matter of time until it faces a royal commission that tips it all upside down. It needs it.

      • Hm. The continuation of a nation comprised of mortal souls being dependent on a continual supply of such mortal souls, you're right - only the next generation matters, much like a sociological analogue of the biological imperative.

        Maybe instead of a military draft, we need to collectively raise our children and draft our best and brightest (and most nurturing?) to take on the job of raising the next generation for n years between 25-40.

        • draft our best and brightest (and most nurturing?) to take on the job of raising the next generation

          I would go a step further and suggest that they should be the only one allowed to reproduce.

        • Maybe instead of a military draft, we need to collectively raise our children and draft our best and brightest (and most nurturing?) to take on the job of raising the next generation

          Good point. I feel like the government already does that to some degree (or at least did before). Subsidies for married couples (hetero ones) were an effort to encourage them to have children, since the government knew that households with a committed man and woman were always the best environment for a child to be raised in.

          It was essentially about encouraging children among those who were most equipped to raise them. Alas, trust the government to screw up one of the only things they ever did right.

    • +1

      the GOV needs to stop subsidising parents.

      FYI, not all parents get subsidised by the government. We don't.

  • I could be wrong here but don't aged care facilities have to pay a set interest rate on these "bonds"

    • Yeah they do. The RAD is a lot more at about $400k+ per resident, if I remember correctly from when my grandparents were there.

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