They sure as hell won't do anything about it if people just accept it and continue to turn a blind eye to settings ignoring the rules. It's unfair on those of us who do offer the free entitlement absolutely free.
I can see where you're coming from, perhaps for some nurseries / LAs the price differential between what it costs and what the nursery receives isn't too much, so you can afford to do it.
The alternative for parents is the nursery withdrawing from scheme (and getting no funded hours) or having nursery forced to provide it (if in fact the LA was bothered - think they would (as they do now) turn a blind eye) which would untimately lead to a fabulous nursery providing outstanding care to my DD close down.
HSM- yes, i have found out they are not strictly allowed to do that but unfortunately they are which means we are paying over £1000 per term after the hours have been deducted for 15 hours. speaking to friends, it seems many nurseries in the area are doing a top up and im not sure there's an awful lot parents can do about it.