Government amends guidance on refund credits protection

The Department for Business (BEIS) and Trading Standards have retreated on advice that refund credit notes for cancelled holiday bookings “will be financially protected” to say only that they “may be financially protected”.

The amendment follows a storm over the earlier confirmation that refund credit notes were protected, revealed by Travel Weekly on Wednesday.

The confirmation appeared in a ‘Business Companion Coronavirus Bulletin’ on travel, issued jointly by BEIS and the Chartered Trading Standards Institute (CTSI) on May 7.

This acknowledged the Package Travel Regulations (PTRs) “still apply” and says “a full refund or re-booking (if Abta or Atol protected) should be offered” to consumers.

But it also noted “the strict application of legislation may not be appropriate” and stated “a credit note is [an] increasingly popular alternative and will be financially protected”.

Since the Travel Weekly story appeared, the Bulletin has been amended and now appears with a ‘Correction’.

This states: “An earlier version of this article said, in relation to cancelled package holidays, that ‘a credit note is another increasingly popular alternative and will be financially protected in the event of future failed travel plans’.

“This is incorrect, and has been amended to the following: ‘A credit note is another increasingly popular alternative and may be financially protected in the event of future failed travel plans.”

It adds: “For the removal of doubt the government position regarding credit refunds is unaltered.”

However, apart from a corresponding change in the body of the Bulletin text the document is unchanged.

It notes the Competition and Markets Authority (CMA) advice “is that credits, re-booking or re-scheduling may be offered as an alternative to a refund” although “a refund should still be an option that is clearly and easily available.

The bulletin also offers guidance on issuing refund credit notes, stating: “Any restrictions that apply, such as the period in which credits must be used, must be fair and made clear to consumers.”

It advises businesses to follow Abta’s guidance on refund credit notes.

Abta has insisted refund credit notes issued in line with its guidelines will be financially protected and has been pressing BEIS to confirm this for weeks.

The association believes this is in line with the existing Atol Regulations and does not require a change in the law.

Travel Weekly understands this is also the view of the Civil Aviation Authority (CAA) which enforces the Atol Regulations.

An Abta spokesperson said: “The Atol scheme payment policy states that deferred bookings for Atol-protected holidays – in other words, credit refunds – are financially protected.

“The package travel regulation rules do not need to be changed for this to be the case.

“Abta absolutely endorses the need for these refund credits to be documented and processed properly, that is why we’ve provided clear guidance to our members on this.”

The Business Companion bulletin acknowledges “there is pressure from the travel sector to relax the current 14-day refund rule” and notes “conversations are ongoing” but suggests any change would require legislation “which could take time”.

It is this law which has not changed.

Travel Weekly sought a response from BEIS and was told: “Rules around package travel and other UK travel bookings remain unchanged.

“Companies have a legal obligation to ensure their consumers are fairly compensated. We are keeping the situation under review and looking at options to support businesses and consumers through this difficult period.

“We continue to engage with the travel sector and consumer advocacy bodies to assess the impact of cancellations made in light of the Covid-19 outbreak.”

Travel Weekly has previously reported the regulatory authorities – the CMA, Trading Standards and the CAA – will not strictly enforce refund rules on the sector despite the government’s failure to clarify the status of refund credit notes.

The CMA, the principal enforcer of consumer protection, has confirmed its investigation of businesses failing to respect refund rights will not take in package travel.

Trading Standards, which has responsibility for enforcing the Package Travel Regulations (PTRs), has issued guidance noting: “Traditional legal remedies and enforcement are likely to be inappropriate at this time.”

And the Chartered Trading Standards Institute (CTSI) has advised it “wants all credit notes financially protected”.

The CAA, which enforces the Atol rules, has yet to clarify its position but it’s understood the CAA will stand behind refund credit notes which remain Atol-protected.


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