Updated: Virgin Holidays to clear refunds backlog after CMA probe

The competition watchdog has secured a commitment from Virgin Holidays to pay the remainder of its £203 million in refunds for thousands of package holidays cancelled due to coronavirus since March 1.

The operator will face court action if it fails to repay customers within timescales agreed with the Competition and Markets Authority.

Virgin said the £203m figure was the total sum of the 53,000 refunds. It said only 1,300 of those refunds, amounting to £4.2m, remain unsettled and would be by the end of today (October 23).

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Virgin said this was “in line with plan to do this by the end of October”. The operator stressed refund requests were 900% higher than they were before Covid, with 2,000 a week and that it boosted the size of its team dealing with refunds and set up a refund credit note process.

Action by the CMA follows a probe triggered after hundreds of complaints were received from people complaining they were not receiving refunds.

Many customers had to wait for an “unreasonably long time” even when they were informed by the operator that they would receive a refund.

Some were told they would have to wait 120 days to receive their money back.

The company has received 53,000 refund requests since March 1.

The CMA has secured formal commitments from Virgin Holidays – known as ‘undertakings’ – that ensure all of its customers receive their money without undue delay and by the following dates:

  • Holidays cancelled before September 1 will be repaid by October 30
  • Holidays cancelled from September 1 to October 31 will be repaid by November 20

“If Virgin Holidays does not repay customers by these dates, the CMA is prepared to take the company to court,” the authority said.

Virgin Holidays will also ensure that people who are entitled to a refund for a holiday cancelled on or after November 1 will be paid within 14 days.

The undertakings apply to all Virgin Holidays businesses that offer package holidays, including Virgin Holidays Cruises.

The company has been ordered to provide the CMA with regular reports on the progress of its repayments.

CMA chief executive Andrea Coscelli said: “People whose holidays have been cancelled due to coronavirus deserve a prompt and full refund.

“Our action means that Virgin Holidays customers should receive all their money back without further delay.

“We are continuing to investigate package holidays in relation to the coronavirus crisis. Should we find that any business is not complying with consumer protection law, we won’t hesitate to take action.”

The announcement follows the CMA writing to more than 100 operators “to remind them of their obligations to comply with consumer protection law”.

It has already secured refund commitments from Tui UK, Sykes Cottages and Vacation Rentals.

A Virgin Holidays spokesman said: “We welcome recognition from the CMA that Covid-19 has resulted in extraordinary pressure being placed on package holiday businesses, including Virgin Holidays.

“We are pleased to confirm that an outstanding 1,300 refunds with a value of £4.2m will be processed by the end of 23 October, as planned and communicated to our customers.

“Since March, the impact of Covid-19 and subsequent global travel restrictions has led to a huge volume of holiday cancellations. The unprecedented volume of refund requests we have received, combined with constraints on our teams and systems during the pandemic, created significant challenges in the processing of refunds.

“Throughout the crisis we have sought to make improvements wherever possible, including increased processing capability and expanded refund teams. We have gradually reduced refund timeframes and are now 98% through the refund queue, with a remaining 1,300 bookings to be processed on Friday 23 October, in line with our plan to do this by the end of October.

“At every step of the way we have monitored refunds progress carefully against our commitments and will return Virgin Holidays refunds in the normal timeframe of 14 days in November. Our focus now is on rebuilding trust with our customers, recognising that it has regrettably taken much longer than normal to process their refunds. We thank them sincerely for their patience throughout.”

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