A leading industry lawyer has described as “extraordinary” how industry watchdog the Civil Aviation Authority (CAA) reacted to Lowcost Holiday’s move to base itself in Majorca last year.
Laura Harcombe, a partner at Hamlins, told yesterday’s ninth Barclays Travel Forum that travel firms in the UK were “getting fed up with being told how to run their companies”.
Lowcost’s decision to base its OTA in Palma last November and leave the Atol scheme prompted an unprecendented response from the CAA which described the situation as unnacceptable.
The CAA then launched a legal investigation and posted a warning on its website warning customers about the level of protection they may get booking with the company.
That advice has since been toned down, but asked about the furore Lowcost’s move caused last year Harcombe said: “It was extraordinary.
“I have never seen that in travel before. It was very bold [of the CAA], they obviously felt passionately about it and took advice.”
Asked if the CAA would have acted the same way if they were getting advice from her, she said: “The purpose of the regulator is so people know where they are. They need to perform in a reasonable and proportionate manner.
“I would question whether making such a public statement is consistent with that objective. I do not think anything should be played out in the press.”
Harcombe added: “Regulation is a good thing, giving consumer protection is a good thing, but it does tie companies in knots.”
Lowcost has always insisted it has done nothing wrong and acted strictly within European laws and its customers remain protected under the EU Package Travel Directive.
Harcombe said some of her clients were becoming concerned that the current review of the PTD will see its scope extended to product that consumer protection was never intended for.
And she warned that all business ought to take stock to work out what the recent Medhotels VAT Supreme Court ruling means for their business.
Her Majesty’s Revenue and Customs are not considering the defeat in the highest court of the land as applying to all firms and are continuing to look at the indiviual circumstances of some.
This means other travel firms which have had TOMS VAT claimed, like Medhotels, my face a wait before they get their money back, warned Harcombe.