Government confirmation that refund credit notes for cancelled holidays are Atol-protected has drawn praise for Abta’s “genius idea”.
But CAA guidance issued following Saturday’s announcement drew competing interpretations and confirmed Atol-holders must pay the £2.50 Atol Protection Contribution (APC) on bookings a second time when customers holding RCNs rebook.
The confirmation came in a joint statement by transport secretary Grant Shapps and business secretary Alok Sharma, with Shapps saying: “We want to send a clear message to passengers that they can book summer holidays with confidence.”
Leading industry accountant Chris Photi of White Hart Associates described it as “helpful, but not an elixir”. He pointed out Abta had insisted RCNs were protected for months and said: “All the CAA has done is put out guideline notes.”
Alan Bowen, advisor to the Association of Atol Companies, said: “The government has said RCNs are valid legal documents. It’s just a pity it took such a long time.
“Whatever you say about Abta, RCNs was a genius idea – the best thing Abta has done for years. Without RCNs, I’m not sure many of us would be here.”
A senior industry source said: “It has been a long haul. Apart from the appalling delay, it’s positive. [However], there is nothing about the conditions [attached to RCNs] that explains why it has been so difficult.”
One leading industry figure described having to pay the £2.50 APC a second time as “outrageous”.
The CAA guidance states: “APC is payable for every licensable sale irrespective of a refund, cancellation or issuance of an RCN. [Where] consumers have accepted an RCN, APC will be payable for any new bookings.”
There was disagreement on the implications of CAA guidance that RCNs “will benefit from Atol protection up until September 30, 2021, if they have been issued between March 10 and September 30, 2020”. This extends RCN issuance to the next Atol renewal date and protection another 12 months.
Kane Pirie, managing director of VIVID Travel and founder of the Right to Refund campaign, issued a statement arguing: “If customers accept RCNs after September 30 they will not be Atol-protected.”
However, the CAA guidance states Atol protection “currently will not apply” to RCNs issued after September 30. The senior industry source noted: “The CAA is not saying RCNs will fall away from October 1. This allows companies to continue to issue RCNs and gives a year’s expiry. We should probably assume it will have to be reviewed again.”
The source added: “Nobody wants to go on issuing RCNs, but we’re not out of the woods. At some point we do have to put a box around this, but when that happens is another matter.”
Abta chief executive Mark Tanzer said the government assurance would “enable consumers to hold refund credit notes with confidence”.
He said: “I regret we had to take a stand. We would like customers to get their money back, but circumstances prohibited it. What we came up with was the right thing for the industry and for customers.”
Abta will issue updated guidance on RCNs within days.