The government will consider legislating to bring ‘agent for the customer’ transactions by travel retailers into the Atol regulations, arguing the practice can cause “considerable detriment and uncertainty” for consumers.

In the meantime, the Department for Transport (DfT) believes “businesses acting as agent for the consumer need to make certain customers are aware . . . [they] will not receive statutory financial protection.”

In a forward to the Atol-reform consultation launched by the DfT today, transport minister Theresa Villiers says: “We want to ensure travel businesses arranging holidays on an ‘agent for the consumer’ basis are fully aware of and fulfil their legal obligations to consumers.”

The consultation document includes a section on ‘agent for the consumer’ sales, where agents “technically buy the holiday on behalf of the consumer rather than sell it to them”.

It notes: “This puts the holiday outside the Atol scheme, although consumers may well not be aware of this. . . [and] it has significant implications for the level of financial protection.

“This can create considerable detriment and uncertainty for consumers, as in many cases the holidays provided on an ‘agent for the consumer’ basis are indistinguishable from Atol-protected holidays.

“Neither the small print on the documentation nor the information given in person or online before booking necessarily makes clear to the consumer that the holiday is unprotected.”

The Dft notes it is not possible to bring such sales within the Atol scheme without primary legislation, but it outlines some small changes – allied to the introduction of a new Atol Certificate for protected holidays – that it argues “will make it more obvious to the consumer”.

It goes on: “We believe the result may well be that consumers are mislead in the absence of clear information that financial protection is not provided with the holiday.”

At least one leading travel industry lawyer has already challenged the suggestion that companies acting in this way might be required to tell consumers that a purchase is unprotected.

But the Dft says: “We believe businesses acting as agent for the consumer need to make certain their customers are aware the consumer will not receive statutory financial protection.

“It is a criminal offence under the Criminal Protection from Unfair Trading Regulations 2008 for businesses to mislead consumers so they make a decision to buy something they otherwise may not have done, including by omitting relevant information.

“We and the CAA propose working with the Office of Fair Trading and the travel trade to ensure businesses only say they are acting as an agent for the consumer when this is in fact the case. . . [and] we will also consider what enforcement action is appropriate.”