Refund credit notes ‘are protected’ by Atol, insists leading accountant

Refund credit notes “are protected under Atol” and Abta would “have no option” but to seek a judicial review if the CAA ruled otherwise.

That is the view of leading industry accountant Chris Photi, head of travel and leisure at White Hart Associates and an expert on Atol compliance.

Photi told a Travel Weekly: “The Air Travel Trust payment policy is clear that refunds and refund credit notes are protected by the Atol scheme.”

Speaking on a Travel Weekly Webcast, Photi insisted: “I can absolutely tell you, if the CAA came out and said they [refund credit notes] aren’t Atol [protected], Abta has no option but to go for judicial review immediately.”

Abta has been urging the government and CAA since late March to confirm the Atol-protection of refund credit notes, issued in place of cash refunds for holiday cancellations if consumers will accept them.

Photi added: “Not that I’m expecting the CAA to come out and say they’re not protected. I’m expecting the CAA to continue to prevaricate.”

He dismissed the CAA’s silence on refund credit notes as “typical CAA”, but added: “The last thing I suppose the CAA wants to do is to come out with a statement that says ‘Yes, these are protected’ when they have nothing to protect them because the Air Travel Trust is low on funds. They would have to get the government’s OK.”

The Air Travel Trust, which pays out to consumers when an Atol holder fails, was largely cleaned out by the failure of Thomas Cook last September.

Photi commended Abta for its guidance to the sector on refund credit notes, saying: “Abta issued very good advice pretty early which aligned itself to consumer protection, which is absolutely vital.”

He pointed out: “Abta has had good dialogue with the CAA, and the Department for Transport broadly supports refund credit notes as a means to support the travel industry.

“My belief is the block came from [the Department for Business] BEIS which is more interested in the insolvency impact.”

However, Photi suggested the industry had also been “a little slow” in providing data on the risks of insolvency to government officials.

He said: “There were a lot of letters about supporting the industry, but there was a three or four-week window when BEIS did not get insolvency data as quickly as possible.

“And there were no immediate failures. One or two failures at that time might have changed things with regards to a change [to the Package Travel Regulations].”

The Package Travel Regulations (PTRs) require Atol-holders to refund consumers within 14 days of a cancellation and are overseen by BEIS, although the Atol Regulations fall under the Department for Transport and are regulated by the CAA.

Photi said: “It’s a difficult situation. We’ve probably reached an impasse on refund credit notes.”

But he added: “They have kind of filtered their way through. The industry has probably managed to get 50%-60% take up on refund credit notes [by customers], which is pretty good.”

Photi criticised consumer bodies Which? and Money Saving Expert, suggesting they failed to understand the risks of demanding wholesale refunds.

He said: “Which? and Money Saving Expert say, ‘Give a refund, we’re fighting for the consumer’. But if that leads to a lot of failures, it means a reduction in choice at the end of this. It means higher prices.

“Where will those guys be then? Have they done a service to the consumer in the long run? Sometimes these consumer champions don’t think about the end game, they just think about the immediate, headline-catching ‘We must get refunds’.

“Notwithstanding that, I do understand there are people who are really feeling the pinch and need their money.”


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