The government has confirmed the Civil Aviation Authority (CAA) can expect new powers to enforce the Atol regime, including the ability to impose fines and seek undertakings from licence holders without going to court.
The confirmation from the Department for Transport (DfT) came today in a letter from aviation minister Baroness Vere to the CAA in which she notes: “I am aware of some existing non-compliance issues . . . and recognise a broadened enforcement toolkit may add useful flexibility.”
The letter suggests the new powers could “contribute towards deterring any bad practice” following reform of the Atol scheme, which the CAA plans to introduce progressively from April next year.
However, the minister’s letter also calls on the CAA to use its existing powers “to suspend or revoke an Atol-holder company’s licence, as well as the option to proceed with criminal prosecution”.
Baroness Vere states: “I would encourage the CAA to utilise these powers.”
The minister confirmed sending the letter on X (formerly Twitter), saying: “I have written to the CAA about . . . wider Atol enforcement powers so it has the right tools to protect consumers purchasing package holidays.”
The letter, addressed to CAA interim joint chief executives Paul Smith and Robert Bishton, confirms the government is looking at “broadening the enforcement toolkit for the Atol scheme, including the introduction of civil sanction powers”.
It states: “In light of the ongoing progress being made towards reform of the Atol scheme, I write to recognise the vital role of the CAA in regulating businesses that sell package holidays including a flight.
“To ensure the CAA is best placed to adapt to the range of possible reform outcomes, I am writing to confirm the DfT’s intention to consider the introduction of a wider toolkit of enforcement powers for the CAA in relation to the Atol scheme.
“The government recognises that the long-term confidence of consumers, the ability of the CAA to reduce the risk of Atol holders failing, and the ability of the CAA to effectively manage the process for providing refunds and repatriations all rely on an effectively enforced regulatory regime.”
Baroness Vere’s letter notes: “Whilst the CAA’s licensing framework remains the primary tool for managing Atol-holder company risk, the CAA does also hold powers to suspend or revoke an Atol-holder company’s licence, as well as the option to proceed with criminal prosecution.
“I would encourage the CAA to utilise these powers if deemed appropriate.”
It adds: “As new regulatory requirements are introduced, it will be important to ensure the CAA has the right toolkit to enforce them.
“I can therefore confirm the DfT’s commitment to work with the CAA to consider broadening the enforcement toolkit for the Atol scheme, including the introduction of civil sanction powers [which] may provide useful incentives to encourage all businesses to comply with the new rules and contribute towards deterring any bad practice.”
The letter goes on: “I am aware of some existing non-compliance issues that the CAA currently works with businesses to resolve and recognise that a broadened enforcement toolkit may add useful flexibility to your approach.
“This could include the ability to impose financial penalties and to seek undertakings from businesses to comply with a requirement.”
The minister notes publication of the letter “will allow us to demonstrate the DfT . . . is fully committed to considering changes to [the CAA’s] enforcement powers for the Atol scheme”.
The CAA launched a consultation on reform of the Atol scheme in April 2021 and followed with a further call for evidence this year. A consultation on firm proposals is expected this autumn.