Abta and the Advantage Travel Partnership have warned some Atol holders could be driven from the licensing regime if the CAA’s Atol reforms reduce their consumer financial-protection options.
The CAA has made clear it views segregation of customer money as a “preferred option” among proposals in its ‘Request for further information’ on Atol reform published in January.
Speaking at the Barclays Travel Forum in London on Tuesday, Abta director of membership and financial protection Rachel Jordan said: “Members who already segregate [customer money] say they can do it. Others don’t segregate at all.”
Asked if businesses might cease operating or withdraw from the Atol scheme if required to segregate funds, Jordan said: “Yes, it is a concern. The CAA has said segregation is its preferred option. If that becomes mandatory, some businesses could say ‘I’m done’.”
Paul Nunn, chief operating officer at the Advantage Travel Partnership, agreed, saying: “The CAA referenced this [could happen] in its consultation.”
However, Nunn added: “As long as there is choice and a phased introduction [of reforms] it won’t be a problem.”
Sudheer Sharma, director of PT Trustees, told the forum: “Change is necessary in the way the CAA is proposing. If we take somebody’s money, we have a fiduciary duty to look after that money.”
He rejected criticism of segregation using trust arrangements – on the grounds of cost and complexity –insisting: “A trust account is simple to work. It gives granular oversight of what is going on. Bonds have generally never been enough, and trust accounts are a lot cheaper and easier to obtain than a bond.”
Sharma also dismissed concerns about the amount of time required to set up a trust account, saying “We typically onboard a new client in two weeks. We have done it in three days.”
Yet Nunn insisted: “We operate trust accounts. They are a not a silver bullet. The insurance that backs payments to suppliers is flaky at best.
“The Air Travel Trust fund is robust. Take out the big failures – and we do need to look at those – and we don’t need a gold-plated Atol scheme.”
Jordan said: “I’ve had a lot of businesses look at the costs of trusts and say ‘Bonds came out cheaper’. It’s complex.”