Abta accuses CAA of ‘lack of clarity’ on Atol reform
‘Large-scale opposition’ to compulsory segregation of client funds
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Abta has accused the CAA of a “lack of clarity” in its rationale for Atol reform and proposal for a variable Atol Protection Contribution (APC) and insisted a one-size-fits-all approach to financial protection “won’t work”.
Travel association Abta hit out at the CAA’s proposals for Atol scheme reform in its response to the regulator’s ‘Request for further information’ on these, issued in January.
Abta noted it had “consulted extensively with members and the financial services industry” in formulating its response, submitted today (Friday March 31) on the revised deadline day.
In a statement, the association noted a point “Abta has made repeatedly is the lack of clarity on the rationale for reform.
“The Covid-19 pandemic demonstrates that resilience in the sector is strong and the Atol scheme stood up well during this time, so [Abta] questions what the reforms are trying to achieve.”
The association noted Abta members “remain very strongly in favour of having a range of financial protection methods (bonds, insurance, and segregation) available to travel businesses to meet their regulatory obligations.
“A one-size-fits-all approach will not work and is not appropriate, and this is a view shared by financial services providers.”
It has told the CAA: “There is large-scale opposition to mandatory segregation of customer monies, whether by way of trust account, escrow or client account.
“There is also scepticism about the ability of many businesses, especially SMEs, to adapt to any requirement to ringfence customer monies – with many suppliers requiring payment for services like hotel rooms up front.”
Abta noted bonding remains a popular form of financial protection, saying: “Many members report it is the simplest and most cost-effective method of financial protection available for their business.”
It argued that “while the bonding market narrowed during the pandemic, it is expanding once again with more options available”.
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Abta’s submission calls for alignment between the Department for Transport (DfT), Department for Business and Trade and the CAA on reform of Atol and the Package Travel Regulations (PTRS), arguing: “These government departments and the CAA need to work together to ensure there is consistency between the financial protection arrangements available in respect of flight and non-flight packages.
“With both Atol and the PTRs under review, there is an opportunity to ensure an aligned approach which would help reduce regulatory complexity and reduce cost for travel businesses.”
Abta also complains of “a lack of clarity about what the CAA is trying to resolve” by introducing a variable Atol Protection Contribution [APC] and reports concern that “variable rates could distort the marketplace”.
Its submission notes: “Members have also raised concerns around the additional complexity that a variable APC will introduce into the Atol scheme.”
Abta has also told the CAA: “It is difficult for members to provide constructive feedback on the CAA’s proposal to introduce a variable APC without any understanding of how the CAA believes this would work in practice.”
In addition, the association argues Section 75 protection and chargeback rights under the Consumer Protection Act “need to be taken into account as part of the overall consumer protection already in place, which reduces the risk faced by the Air Travel Trust fund”.
It points out: “Many customers pay for their Atol holiday with a credit card, providing them with consumer protection, and this results in fewer claims to the CAA in the event of a failure.”
Abta reports its consultation with members and industry stakeholders included a video conference call and survey of members, meetings with the association’s Federation of Tour Operators and Policy Advisory groups, and 11 financial protection focus groups “which brought together members, partners and financial services providers including banks, insurers, merchant acquirers, bond providers and trust providers”.
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