Most travel industry trust arrangements operate outside the requirements of the Package Travel regulations (PTRs).

That is the view of Alan Bowen, legal advisor to the Association of Atol Companies, who pointed out: “A PTR trust account operates on the basis that all the money goes into the account and doesn’t leave until the holiday is over. So you can’t use any of the funds to pay suppliers.”

Bowen said: “The trust accounts used by most people don’t operate in accordance with the PTRs. They allow funds to leave [the account] to pay airlines, hoteliers and transfer companies on the basis that you insure against their failure.”

The difficulties travel business operating trust arrangements have had refunding customers for cancellations due to Covid has exposed the failure of most companies to operate in line with the PTRs, according to Bowen.

MoreAccess the Travel Weekly Insight Annual Report 2020-21

He told a Travel Weekly Insight Report launch event in December: “There is no claim on the insurance policy where the [supplier] business doesn’t fail.

“Companies running trust accounts have been in no better position to offer refunds than companies which are bonded or have a licence under the Atol scheme because they can’t get the money back from the suppliers. The trust account hasn’t helped.”

Bowen said a CAA review of consumer financial protection, expected imminently, would examine the use of trust funds.

He suggested moving to trust arrangements “could be a real issue for a lot of people”, but said nothing was likely to change this year given “the way this government tends to work”.

Bowen said the CAA would examine two issues: “One is what the CAA is going to be looking for as regards liquidity, the use of customer money [and] potentially the use of trust funds.

“[Second], they have to look at the £2.50 [Atol Protection Contribution] because clearly very little money has gone into the Air Travel Trust fund [in 2020].  They’ve had an awful lot of claims and there is very little left [in the fund].”

More: Access the Travel Weekly Insight Annual Report 2020-21

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