The travel trade is not ready for the £1 ATOL levy on holidays due to come in on Tuesday to fund consumer financial protection.

That is the alarming conclusion of the Association of ATOL Companies, whose members sell 80% of ATOL-protected holidays and flights.

The £1 ATOL Protection Contribution will be added to protected holidays from April 1, largely replacing the current bonding scheme. However, new licence holders and those holding ATOLs for less than four years will need bonds, as will companies that have changed their business or that the Civil Aviation Authority considers a risk.

In a statement, the AAC said: “Many businesses will be walking blindly into the scheme. The APC will subject ATOL holders to greater investigation and reporting procedures.”

AAC chairman David Mortimer said: “We have been taking calls from worried members and non-members who will be expected to have effective business systems to ensure compliance.”

He added: “We are concerned the plan is insufficiently clear, particularly in relation to the need for bonding. Members do not feel in possession of all the facts. We do not believe everyone has [the necessary] business systems in place.”

However, the CAA is unaware of anyone unable to obtain a bond, according to consumer protection group deputy director David Moesli. He estimated the cost increase for bonds at the top end of the market at 1%-2%.

Yet AAC legal adviser Alan Bowen said the cost of bonds had doubled in some cases. “Most bond holders now pay 3%-5% of the value of a bond, but there are obligers looking for premiums of 6%-10%.”

Paul Mclean, director of bond provider International Passenger Protection, warned: “With fewer [bonding] providers available, there will be unnecessary panic to obtain bonds.”

Mortimer added: “Our real concern is over the September ATOL renewals.”