The CAA’s David Moesli explains why the recent announcement of changes to the UK financial protection regime is more than just about the abolition of Small Business Atols
Some of you will already have read about the CAA’s ‘Rebalancing Atol’ consultation, and you may have the impression it is solely about abolishing the Small Business Atol (SBA).
However, this is just one of four main proposals and I’d like to give a bit more insight into the thinking behind it.
Moving online
As part of a wider programme to make our work as efficient and effective as possible, the CAA is making a major investment to take our regulatory activities online. The Atol system is included.
An important part of this investment is to simplify our administration and reduce the burden on the industry. So we are proposing to introduce self-service and self-assessment tools to deliver regulation more efficiently.
One of the key proposals relates to better assurance reporting. We want to move away from tick-box licensing to a system of assurance provided by accounting professionals who have demonstrated a good understanding of the Atol regulations and requirements.
With these improved standards we can then concentrate resources on identifying those businesses that won’t play by the rules – for example, by seeking to underpay the Atol Protection Contribution or submitting accounting records that do not show a true position.
Phasing out SBAs
So where does this leave the SBA scheme? The SBA was introduced 10 years ago as a simple way into Atol with no financial test. Many good small businesses have developed and this has added to consumer choice at the specialist end of the market.
However, surprisingly few have progressed on to standard Atols and problems have arisen where some SBA firms have carried on a minority of their travel business under the Atol licence but have promoted the licence as a sort of comfort blanket for consumers buying non-Atol holiday products. This impression cannot be right when Atol is associated with financial resilience and protection.
Another issue with SBAs is that, although these firms fall below the 500-seat level, their price per holiday and turnover can be substantial, with large amounts of customer money at risk.
The question therefore arises as to whether such firms should be able to carry the Atol logo without any financial test.
Our proposal is to phase out SBAs as they represent a significant net cost to the Air Travel Trust fund, and to bring these businesses more into line with other Atol-holders.
It should be remembered we have worked with the industry to develop alternative options for small firms which don’t want to be licensed directly by the CAA. Accredited bodies and franchise schemes now provide practical and commercial alternatives.
We don’t believe the changes we propose will bring significant new costs. In any event, any new costs will be strongly offset by the improved licence compliance and assurance that will result.
The CAA is very keen to hear the industry’s views. To read the consultation, go to: bit.ly/CAAconsultation