ABTA has warned that its proposal to force bed banks to accept responsibility for customers’ money in the event of an agency failure could be applied to non-ABTA members.
The association said it would contact the Office of Fair Trading (OFT) if non-ABTA bed banks flout the ruling, which is expected to be passed on October 2.
The warning came as ABTA bed banks, including hotels4u.com, Med Hotels, somewhere2stay.com and youtravel.com, threaten to leave the association. Meetings are being held with bed banks, including non-members such as Holiday Brokers.
Holiday Brokers founder Steve Endacott said: “ABTA cannot enforce this. It will be a cold day in hell before I expose my business to the level of risk of a major agency going bust.”
But ABTA chief executive Mark Tanzer insisted: “This change to the articles will only apply to ABTA members but, in so far as it follows broader consumer protection and contract law, we believe the same obligations exist for non-ABTA suppliers. Where we see these obligations being flouted by non-ABTA suppliers, we will approach the relevant authorities charged with protecting consumer rights, so they can take action as they see fit.”
ABTA chairman John McEwan said the move was designed to stop a repeat of this summer’s problems when bed banks, including non-members, refused to refund customers after Freedom Direct’s collapse.
He said: “If ABTA is able to clarify the situation with regard to its own members, it will also look to the OFT to ensure the problems encountered this summer do not reoccur as a result of the actions of non-ABTA members.”
Sarah Lacy, partner at specialist travel law firm Travlaw, believes the proposal could apply to non-members. In a blog post, she said: “If the proposal is intended only to deal with pipeline money, we agree with ABTA when they say the proposal broadly mirrors the existing law, and will also apply to non-members; but we do think the proposed change may have a slightly further reach than the common law would in respect of an agent selling through another agent.”