ABTA chief executive Mark Tanzer has admitted the association is in a “very unhappy situation” on the issue of financial protection following XL’s collapse.

The demise of XL Leisure Group and confusion over consumer protection has already led to customers asking travel agents for holidays that are fully covered. This week Thomson and First Choice launched a joint TV ad campaign to highlight practical advice offered by its high-street agents.

Tanzer, speaking at Travel Weekly-sister title Travolution’s Question Time, said: “ABTA is in the middle of a very unhappy situtation about financial protection. It’s very uneven from the consumer’s point of view. It’s a problem in terms of consumer trust in travel.”

Teletext Holidays managing director Matt Cheevers told the same debate that the new supplier failure insurance – marketed by insurance companies in the wake of XL’s demise – was another cost consumers would be reluctant to pay.

He called for either all or no travel companies to be protected instead of the current two-tier system, adding: “The whole system is a complete joke.”

Lowcost Travel Group chief executive Paul Evans, who told the debate he personally lost around £50,000 as a result of the collapse, added: “It was chaotic because I don’t think people understand [financial protection]. From the consumer’s point of view there is still an element of trust in the ABTA logo; it’s about to be subsumed by ATOL.”