I don’t know about you, but I am becoming weary of watching bright-eyed media presenters almost salivating at the prospect of financial doom!  There are many reasons for this financial crisis, very few I suspect are actually the fault of ordinary working people.  The recent crisis at Thomas Cook provided for a similar outpouring of ‘joy’ amongst some media companies, detailing hour by hour the trials and tribulations of this company.  During that week we experienced an upsurge in calls to our helpline from worried holidaymakers concerned that they were going to lose their money or holidays.  One well known media company tried to extract a ‘panic’ comment from me, in support of the bias they were clearly going to present in their report.  Naturally, I advised the programme’s journalist that not only was I not going to join him in this ‘panic-fest’ but I would comment that the general view is that Thomas Cook, like many other such companies were no doubt acting responsibly and that we should all trust the statements made by the company until such time as the contrary is proved.  I also advised that this was the guidance that we were offering Consumers and that it was beholden of all to ensure that a cool calm, dispassionate analysis was provided and allow the said company the time to resolve their difficulties. It will not surprise the reader to note that my ‘contribution’ was not used – the balanced Consumer view was one that this particular reporter did not want to offer the viewing public!

It was also abundantly clear from my travels that week, that there were those in the House of Commons who took the view that the said trials and tribulations were not a matter for government.  However, we learnt that the Prime Minister was briefed on the situation, presumably to develop an action plan?  The Economist summarised the dilemma for the Government and the company:

“For now, Thomas Cook is too big to fail. The banks have lent it too much money. If it were to go bust, the Civil Aviation Authority, which acts as travel operators’ insurer of last resort, would probably go under, too. Thomas Cook was planning to report its full-year results on November 24th, but it postponed the announcement until discussions with its creditors are complete. The bankers are likely to give Thomas Cook another, though maybe the last, lease of life”.

Thomas Cook is not the only company to come under scrutiny and difficulty.  In recent weeks there have been failures of travel companies and we can see from this latest TravelMole article, that the Civil Aviation Authority has withdrawn the ATOL license for a travel company on the basis that in the opinion of the CAA the company in question was:

“unable to meet its liabilities and obligations to its customers”.

For the trade, the lesson has to be; never at any previous stage has your product come under such close scrutiny, both from the public and the press.  As confidence collapses a reasonable company will responsibly manage its message to its Consumers and ensure that even though they may be in some difficulty, they must follow the premise that they should trade with openness, responsibility and respect for the end-users of their products.

For Consumers, the primary message must be: take care with the messages contained within the media!  Try not to get sucked into the almost rampant panic that has now become a fact of daily life.  Examine information from a wide variety of sources – then make your conclusions on any ‘Consumer’ situation!

From a travel perspective, Consumers need to also understand how their money is protected.

Whenever a holidaymaker is or has booked a Package Holiday they should look out for the following protections for their money:

1. ABTA Bonding. This has been controversial in recent years because the scheme’s protection has been reduced in certain circumstances.  Essentially, before an agent can become a full member of ABTA, they must provide a bond against failure, based on the value of their turnover.  If you are a principal, in other words a tour operator, then you must protect the elements of the package that does not include a flight.  The principal can either choose to get that protection from elsewhere or ABTA can provide such a bond under certain conditions.  It is quite possible for a tour operator to have provided two bonds to cover the operation of their business activities. It should be noted that in some cases where ’single sales’ are carried out, such as accommodation, then bonding is not required.  You should also be aware of the tendency in recent years for travel companies to use ‘non-bonded’ companies when putting together packages, which could mean that you do not have cover for that element.  In the event that the ABTA Bonded company fails, ABTA should recompense you for that failure, except where the agent/principal has failed to make the booking of your holiday!
2. AITO Assured. Until recently, AITO (the Association of Independent Tour Operators) offered a 100% guarantee to Consumers.  Unfortunately one of their members suffered a financial collapse and as a result the insurer withheld cover on the basis of an alleged material non-disclosure.  As a result AITO offer assurance that each of their members are ‘required’ to have financial protection in place for Consumers and that their members ‘are required to submit details of their financial protection arrangements to AITO on a regular basis’.
3. ATOL Licence. ATOL or Air Tour Operators Licence is administered by the UK Civil Aviation Authority.  Travel companies selling air holidays or flight only tickets (note this does not apply to airlines) are required to have a licence.  The companies are required to comply with the licensing requirements of the CAA who state that, “[it carries] out checks on the tour operators and travel organisers it licenses”.  The travel company contributes to the fund and this money comes from your contribution at the point of sale of your holiday.  Some companies are required to place an additional bond with the CAA.  The scheme states that in the event that a holiday provider goes bust, the scheme will refund monies or allow for the continuation of your holiday if you are abroad.  As Consumers have discovered in recent years, this cover does not always deliver, particularly if it is alleged that you have purchased a so-called DIY Holiday (see the latest article from HolidayTravelWatch on Package Holidays!)
4. The ABTA Memorandum & Articles of Association. This is the founding document of ABTA.  Within the document at point 11, power is given to establish a Code of Conduct for the benefit of ABTA and its members.  In addition, point 11 provides for sweeping powers with its members if there are any concerns over the trading conduct of the member.  At 11 (6) it states that if Consumer Detriment is suspected, either through a breach of the ABTA Code of Conduct or breaches of accounts rules, then representatives of ABTA can enter any member’s place of business and obtain full cooperation from the staff.  ABTA can check all financial records, interview people associated with the business and where they believe that there is a threat to the Consumer or the good name of ABTA, they can terminate that membership or place conditions on the membership.  Obviously, if you have concerns about any company, then you should seek information from ABTA as to whether or not they have invoked their powers under their constitution.
5. Debit Cards. If you paid for your holiday by debit card, the rules for recovering your money from a debit card are different to when you pay by credit card. We understand that if you pay by Maestro card, the bank is not obliged to refund you under current UK domestic law or where there a bankruptcy arises. The only exception would be if you ordered goods or services online from a company whose website’s centre of operations lay outside the UK. If you paid by a Visa Debit card, then you will be able to claim your money back through the Visa Debit Chargeback Scheme. You can claim your money back if the goods are damaged or the products or services are not delivered. You must make such a claim with your card issuer within 120 days of you not receiving the goods or where the company has gone into administration. (We would strongly recommend that these issues are checked before taking action. The BBC have produced a good guide on this issue.
6. Credit Cards. If you paid for your holiday by credit card there is an argument that your credit card company should assist you to resolve this dispute under Section 75 of the Consumer Credit Act. You should consider contacting them to lodge your complaint. This link relates to a template letter you could send to your credit card company to activate your complaint with them (this is provided by Consumer Direct).  (Check with your card issuer the time limits for claiming – if you are close to that limit, do not wait for the travel provider to respond!).  In the event that the credit card issuer refuses to help you, then you should use the complaints process within your credit card contract.  If they still refuse to assist you, then you should report them to the Financial Services Ombudsman.

The moral of the story for Consumers is this; check all claims of membership made by any travel company – check that all elements of the holiday you purchase is fully covered by the various schemes of protection – check that you receive written confirmation of your protection – be aware of the distinction some companies will make that you have not purchased a package holiday (consider the issues and then respond!).

As the saying goes – Keep calm and carry on!  We would add for Consumers, with the right information in your pocket!

Tags: ABTA, ABTA Code of Conduct, AITO, credit cards, debit cards, Holiday Financial Protection

This entry was posted on Tuesday, December 6th, 2011 at 4:04 pm and is filed under Political Lobbying, The Crows Nest, Your Consumer Rights. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.