The Department of Business has responded to requests by the Association of Independent Tour Operators (AITO) for a progress report on banks’ unfair treatment of SME travel companies – some seven months after it said it would raise the issue with the banks.

As reported in Travel Weekly, AITO asked the department to look into the problems faced by small and medium-sized travel companies who are being asked to stump up hefty financial guarantees by credit card merchant acquirers.

AITO was assured the government would discuss the matter with the banks at a credit card summit in November, but despite repeated attempts to find out how it was progressing, the association heard nothing until Travel Weekly contacted the Department for Business this week.

The department said: “We understand the concern of small and medium-sized operators that are struggling to manage their cash flow in the current economic climate. This is a complex issue and one we are looking into. We have engaged the banks and presented the examples passed on to us. The banks are currently reviewing these examples and we are waiting to hear back from them before considering the next steps.”

“The credit card summit was not an appropriate forum to raise the issue, however, we have since raised it with APACs and with the British Bankers’ Association. We held discussions late last week with one bank about the most recent case that has been passed on to us. They are looking into the specifics of that particular case, and we will respond to AITO shortly.”

While pleased that some action was being taken, AITO director Noel Josephides was unhappy at the poor communication between the department and the association. “The whole matter would have progressed in a more satisfactory manner if the department had at least acknowledged our communications. It doesn’t take much to pick up the telephone or to send an email saying that the whole question is being looked into. If you don’t hear, you assume that nothing is being done.

“If the credit card summit was not the appropriate forum, then why weren’t we told? Many months have gone by, small businesses are suffering and it is not really clear what action BIS has taken,” he said.

“I hope that BIS does not believe that by passing on the problem, they have helped solve the issue, and can therefore wash their hands of the matter.”

AITO is still awaiting a response to its open letter to Sir Alan Sugar, in which it asks the newly appointed ‘business Czar’ to mediate between banks and travel companies.