Abta will consider trust accounts for members renewing financial protection arrangements in March following the association’s announcement last week that it would “open discussions with potentially-suitable trust account providers”.
Rachel Jordan, Abta director for membership and financial protection, confirmed: “We’re taking this approach for the March renewal, which has just started. Maybe we can accept a trust arrangement.”
Abta made clear it won’t financially protect or manage the trust arrangements, saying: “Abta will not be managing or financially protecting trust accounts and will not be responsible for dealing with claims arising from company failure.”
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Comment: How to make the move to a trust account
Jordan said the move came in response to members’ desire for flexibility expressed in a consultation on CAA Atol Reform proposals this summer.
She said: “Historically, Abta only accepted bonds and Financial Failure Insurance [FFI]. That changed following a board decision [last month]. Members’ responses helped with that thinking. Abta members want flexibility.”
Jordan also promised “a new guidance note on what you need to do to calculate a bond” which was due to go out last week.
She acknowledged Abta had changed its approach to assessing the risk of member businesses when calculating bonds at the time of the September 2020 renewal as a consequence of the amount of consumer money tied up in refund credit notes (RCNs).
Jordan told the Abta Travel Regulations Conference: “Abta’s approach did change around September last year to looking at the total amount of money at risk. The reason is companies were holding on to customer money for much longer and in larger amounts.”
She argued: “Abta does still look at what the business is like, but we have this added point about the amount of money protected.”
Jordan reported “a massive response” to the association’s consultation on CAA Atol Reform proposals and said: “There was general opposition to the segregation of [customer] money. Some members already segregate, but there was concern at restricting competition.”
Members also “don’t want Atol reform siloed” and do want a lengthy transition period, she said: “The general feeling was members would like a two-year pause [to reform] to get businesses up and running, and a transition period of five to 10 years.”
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