Analysis: Research casts doubt on need for CMA pricing shift

The Competition and Markets Authority (CMA) has launched an online campaign fronted by TV presenter Alexander Armstrong to promote its ‘clear pricing’ rules now in force, despite consumer research suggesting most holidaymakers expect to pay local taxes in resort without their inclusion in a total price.

 

The CMA campaign highlights a ‘Three Step Pricing Check’ for businesses to stay “within the law” so customers don’t face added costs “at the checkout”.

 

However, CMA guidance to the travel sector extends beyond pricing “at the checkout”, requiring retailers include taxes or charges paid in resort – often weeks or months later – in the total price.

 

More: CMA warns ‘we will act’ in enforcing new pricing rules on retailers

 

Abta warns of ‘potentially serious consequences’ if new pricing rules ignored

 

The campaign tells businesses to “show the total price up front, include all mandatory charges [and] if you can’t give a total yet, [asks] is it clear how customers can work it out?”

 

The CMA notes “it’s illegal to hide additional mandatory fees, such as a booking or delivery fee, taxes or other charges until late in the purchase process”.

 

Armstrong says: “Nobody likes hidden fees – we want the price we see to be the price we pay. If you’re a business owner, make sure you pass the CMA’s Three Step Pricing Check. The first price customers see should be the price they pay.”

 

The CMA suggests the campaign shows “how easy it is for businesses to get it right”, although that is debatable in travel.

 

Emma Cochrane, CMA acting executive director of consumer protection and enforcement, said: “We want businesses to stay on the right side of the law.

 

"We’re serious about supporting businesses. [But] the CMA is also protecting consumers through enforcement action and progressing its first investigations into pricing practices.”

 

Alan Glen, president of the Scottish agents’ association the SPAA, slammed the new pricing rules at the SPAA annual dinner last week, saying: “Why fix a problem that didn’t exist? 

 

People already accepted they were subject to taxes in other countries and agents knew they must advise clients of resort fees. We weren’t hiding anything.”

 

That point was confirmed by research for the Travel Weekly Insight Report, released last week, which found a majority of UK holidaymakers expect to pay local taxes or charges on holiday.

 

The research, conducted in January among almost 1,300 UK adults, found 55% of those likely to take an overseas holiday this year and 60% of those who had a holiday last year expect to pay local tax in resort.

 

An additional one in four were unconcerned – they neither agreed nor disagreed on expecting to pay a local tax. Only 15% did not expect to do so.

 

Abta said: “We continue to receive questions and are adding to our guidance note.” It noted some members believe ‘from’ pricing is no longer permitted. But it advised: “Members should still use ‘from’ pricing if not all the travel arrangements are available at the quoted price.”