7. Cancellation of provider approval

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What is cancellation of provider approval?

Provider approval is required to operate an approved education and care service under the National Law. If a provider approval is cancelled, all service approvals held by the person who was the approved provider are also cancelled. This includes associated children’s services.

Cancellation of provider approval is a significant compliance action which permanently prevents a person from operating any approved education and care service.

When can it be used?

[ National Law, Section 31 ]

The regulatory authority may cancel a provider approval for the reasons set out below.

If a person is found guilty of an indictable offence, the regulatory authority should consider the extent this affects their suitability to provide an education and care service.

Grounds to cancel a provider approval
The regulatory authority is satisfied that the approved provider or a person with management or control of a service operated by the approved provider is not a fit and proper person to be involved in the provision of an education and care service
The regulatory authority is satisfied that the continued provision of education and care services by the approved provider would constitute an unacceptable risk to the safety, health or wellbeing of any child or class of children being educated and cared for by an education and care service operated by the approved provider
The approved provider has been found guilty of an indictable offence (or an offence that if committed in this jurisdiction would be an indictable offence)
The approved provider has been found guilty of an offence under the National Law as it applies in any participating jurisdiction
The approved provider has breached a condition of their provider approval
The approved provider has not operated any education and care service for a period of more than 12 months (including any period of suspension).

[ National Law, Section 21 ]

The regulatory authority may reassess an approved provider’s fitness and propriety to provide an education and care service at any time. This includes assessment of a person with management or control of the service. If a person is no longer a fit and proper person to be involved in the provision of an education and care service, the regulatory authority may then consider cancelling the provider approval. The approved provider is required to notify the regulatory authority of any changes affecting their fitness and propriety (see Operational Requirements – Governance and leadership).

Regulatory authorities should also consider the principles of best practice regulation (see Good Regulatory Practice), including the Ayres and Braithwaite enforcement pyramid.

Cancellations are at the top of the pyramid. Usually, cancellation would be the final course of action, after a graduated response moving up the regulatory pyramid, depending on the willingness and ability of the provider to comply and the seriousness of the offence.

Along with prosecution, cancelling a provider approval is a severe way to address non-compliance at the service level. In some circumstances, it may be appropriate to use cancellation in conjunction with prosecution.

Cancelling a provider approval means that all approvals for services operated by that approved provider will also be cancelled, unless the regulatory authority consents to a transfer of service approvals. This would have a significant impact on the families using these services.

Where a provider operates one service only, the regulatory authority may consider whether there are grounds to also cancel the provider approval. Note that section 31 of the National Law allows a provider approval to be cancelled if the provider has not operated a service for a period of more than 12 months.

When considering under the National Law, the regulatory authority should consider the below matters.

Considerations when deciding whether to cancel provider approval
Whether there are any alternative sanctions that might achieve a similar or better outcome, such as a condition on provider approval
Seriousness of the non-compliance
Cost of regulatory action
Effect on public confidence in the regulatory system
Actual or potential harm caused by the non-compliance
The impact on the community and families using the service
Whether it is in the public interest
History of non-compliance
Cooperation of the person and the likeliness they will continue to be non-compliant
Whether it will act as a deterrent to other providers.

How can it be used?

The regulatory authority must consult the regulatory authority of each jurisdiction in which the approved provider operates an approved education and care service before cancelling the provider approval (see Applications and Approvals – Exercise of powers by another regulatory authority).

Show cause notice

[ National Law, Section 32 ]

If the regulatory authority is considering cancelling a provider approval, it must first give the approved provider a show cause notice advising of its intention to cancel the provider approval and the reasons for the proposed cancellation.

The notice must advise the approved provider they have 30 calendar days to respond in writing.

[ National Law & Regulations, Section 33, Regulation 18 ]

The regulatory authority must consider any written response from the approved provider within 30 calendar days before making its decision.

The regulatory authority may decide to cancel the provider approval, suspend the provider approval for up to 12 months, or to take no further action.

The purpose of a show cause notice is to give the proposed recipient an opportunity to explain why they should not receive the cancellation. The show cause notice should set out very clearly the reasons for the proposed cancellation, so the person fully understands the regulatory authority’s rationale and can respond appropriately.

Content of cancellation notice

[ National Law, Section 33 ]

The regulatory authority must give the approved provider written notice of its decision. The notice of the decision must specify the date the cancellation takes effect.

The National Law and Regulations do not say what else needs to be included in a notice of cancellation of provider approval. However, the regulatory authority should make sure the notice includes the following additional information:

the name of the approved provider to whom the notice is being given
the name of the regulatory authority giving the notice
the signature of the person issuing the notice
information about the right to external review (see Reviews).

Taking effect of cancellation

[ National Law, Section 33 ]

If the regulatory authority decides to cancel the provider approval, cancellation takes effect at the end of 14 calendar days after the date of the decision, or at the end of a period specified by the regulatory authority.

A regulatory authority could specify that a cancellation takes effect less than 14 calendar days after the date of the decision. However, the regulatory authority should ensure it has strong evidence this is necessary before deciding on a shorter period.

Application to transfer service approval if provider approval is going to be be cancelled

[ National Law, Section 34 ]

An approved provider whose approval is to be cancelled may apply to the regulatory authority for consent to transfer a service approval to another approved provider.

Application for consent to transfer must be made within 14 calendar days after the date of the decision to cancel the provider approval. In this case, the service approval is suspended until the regulatory authority has determined the application for consent to transfer.

If the regulatory authority consents to the transfer, suspension of the service approval ceases on the date the transfer takes effect, unless conditions of transfer specify a later date.

If the regulatory authority decides not to consent to the transfer, the service approval is cancelled from the date of its decision.

Can it be appealed?

[ National Law, Section 192 ]

A person can seek external review of a decision to cancel a provider approval (see Reviews).

What happens after it has occurred?

Notice to parents

[ National Law, Sections 34, 36 ]

The regulatory authority may require the approved provider to give written notice of the cancellation of their provider approval and its effect to parents of children enrolled at any or all services operated by the approved provider.

If the approved provider fails to comply with the notice, the regulatory authority may decide to escalate the matter. The maximum penalty a court may impose for not giving the required notice to parents of enrolled children is $3,400, in the case of an individual; $17,200, in any other case.

[ National Law, Section 35 ]

If a show cause notice is given, the regulatory authority may also request that the approved provider supply within seven (7) calendar days the contact details of parents of all children enrolled at a service operated by the approved provider. The regulatory authority may notify parents of the suspension. The regulatory authority cannot use the contact details for any other purpose.

The powers of the regulatory authority on giving notice to parents are intended to make sure parents will always be notified if provider approval is cancelled, because this automatically results in the cancellation of the related service approvals and, consequently, the closure of those services.

Generally, the regulatory authority should only need to require the approved provider to give written notice to parents if they are concerned that this may not occur otherwise. If the regulatory authority is concerned that, even with a direction to the approved provider, parents may not be notified, the regulatory authority should exercise its power to request the approved provider give the contact details to the regulatory authority, so it can contact the parents.

Disclosure

The regulatory authority may publish specific information about cancellation of provider approval (see Publication of enforcement actions).

Operating a service with cancelled provider approval

[ National Law, Section 103 ]

A person who operates an education and care service without provider approval is committing an offence under the National Law and the regulatory authority may consider taking further compliance action. The maximum penalty that may be imposed by a court for this offence is $22,900, for an individual; $114,900 in any other case.

If, prior to the cancellation of the provider approval, a person is approved to manage or control an education and care service due to death or incapacity of the approved provider under section 41 of the National Law, the service approval is not cancelled. However, the service approval is cancelled if the person ceases to manage or control the service.

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