The CAA has given fresh detail on three key aspects of its proposed Atol reforms while insisting “no decisions have been made”.
One is that the proposed start date of April 1 next year could see only a partial introduction, or what CAA head of Atol Michael Budge called “a day-one approach”, with further requirements introduced through a transition period.
Second, the ‘client accounts’ outlined in the CAA’s ‘Request for further information’ could be added to current financial‑protection measures to meet the CAA requirement for segregation of client money.
Third, while the CAA has dropped proposals for segregation of pipeline monies held by agents, it fully intends to return to this.
More: Special Report: CAA asserts case for change on Atol
Analysis: The key points of the CAA’s Atol Reform update
CAA’s Atol reform plan ‘clouded’ by Thomas Cook collapse
Budge outlined the CAA’s thinking at Abta’s Travel Finance Conference last week, rejecting suggestions the reforms have been driven solely by the scale of Thomas Cook’s collapse in September 2019.
He insisted: “We proposed to introduce this reform early in 2019. Then Thomas Cook collapsed and there was a challenge around the timing. We introduced the consultation during Covid. [But] it wasn’t a reaction to Covid and it wasn’t a reaction to Thomas Cook.”
Budge conceded an April 1, 2024, start date for the new regime made for “a punchy timetable”, but he said: “We think it’s achievable. There is a risk, but we have to start the process.”
However, he explained: “April will be the start of a transition period. There is only so much that can be addressed now. There might be a day-one approach [next April] and it would develop through the transition period. It’s quite possible we see change around a variable Atol Protection Contribution come later.”
Budge suggested one option could be to allow a “hybrid approach” of the current licensing arrangements with segregation of customer payments in client accounts alongside.
He said: “We’re not saying we’ll introduce client accounts and that will address the financial resilience of the scheme. But client accounts could sit alongside the existing approach or alongside mandatory minimum financial-security requirements.”
Budge also confirmed: “We see pipeline monies as an important part of the system. It’s the sequencing [that is the issue]. We’ll look at Atol holders first, get to a decision point [on that], then look at pipeline monies.”
More: Special Report: CAA asserts case for change on Atol