Abta has urged the CAA not to impose compulsory segregation of customer money on Atol holders, noting “the vast majority” of members do not segregate funds at present.
Rachel Jordan, Abta director of membership and financial protection, reported members feedback on the CAA’s latest Atol reform proposals, saying: “We’ve heard segregation is the CAA’s ‘preferred option’.
“Members have said, ‘Please don’t mandate segregation. That would be tricky.’”
More: Analysis: Atol reform devil in the lack of detail
Speaking at the recent Abta Travel Law Seminar in London, Jordan insisted: “The vast majority [of members] do not segregate at the moment.”
She confirmed most Abta members “are happy” with the CAA’s proposal to move from a £2.50 flat rate Atol Protection Contribution (APC) on bookings to a variable rate. But she asked: “How will it work? What will it be based on? How will a business know from one year to the next how much the APC will be?”
Jordan added: “There is concern about transparency. The CAA is not saying it would disclose the level of APC, but if business A is selling the same product as business B at a substantially different price, it [the difference in APC] may be clear.”
She also raised concerns about the impact of Atol holders switching to trust accounts to segregate funds.
Jordan noted “there may be costs to that”, and pointed out where Abta held a bond on behalf of a business: “How would we know how much was in the trust? There would need to be monitoring and there would be costs and resource issues attached to that.”
She said: “I’m not sure there is any appetite at Abta to get into monitoring.”
Jordan reported being told by some businesses ‘We have a trust account for the CAA, why not with Abta?’ and said: “It would be good to have one trust account for both. [But] the regulatory requirements for Atol and the PTRs are different.”
She called for the Atol and package travel regulations to be aligned.
Abta director of legal affairs Simon Bunce agreed: “Trust arrangements under the PTRs are prescriptive.”
Paula Macfarlane, Abta senior solicitor, told the seminar: “We want travellers protected without making it onerous for businesses. But we’re always looking at these things separately.”
Andy Cooper, head of regulation and compliance at customer loyalty specialist Kognitiv, warned: “We’ve seen a series of knee-jerk reactions [on financial protection] and there is a serious risk of that now.
“What tends to happen is that those already in the regulatory framework tend to be more heavily regulated rather than [regulators] looking to level the regulatory playing field.”
Abbi Hunt, general counsel at luxury hospitality and leisure operator Belmond, noted: “Atol is a very small part of our business. The vast majority is non-Atol.
“If there is [a requirement for] segregation of customer money, I would be concerned at having the worst of all worlds. I wouldn’t want Atol to become the most onerous part of our business.”
Matt Purser, head of strategic partnerships at bond and insurance provider Cork Bays Fisher and a director at Travel Industry Experts, told the seminar: “Everyone agrees there should be change, but there is no agreement on the outcome. I’m concerned how we find a workable solution in the time available.”