The CAA has reassured the sector it “is not saying any” of its Atol reform proposals, including segregation of customer money, will be mandatory under a new regime, although segregation remains its “preferred option”.
CAA head of Atol Michael Budge insisted “we’re not saying anything will be mandated” when he addressed an Abta Travel Law Seminar in London yesterday.
He also suggested: “There appear misconceptions about what segregation means.”
Budge provided an initial summary of industry responses to a ‘Request for further information’ issued in January which identified segregation of customer money as the CAA’s “preferred option” for reform.
This followed an initial Atol Reform consultation published more than two years ago in April 2021.
Budge told the Abta seminar: “When we set out that segregation is our ‘preferred option’ that was not us saying segregation will be a requirement.
“Segregation may be as simple as separating customer money and demonstrating how you are using it.”
He noted the ‘Request for information’ “indicated possible different options [for segregation]” and argued: “That doesn’t necessarily mean trust accounts. It doesn’t necessarily mean segregation will be costly. It doesn’t necessarily mean businesses can’t pay suppliers in advance [from segregated funds].
Budge added: “A number of businesses tell us they already segregate [customer money] and they are using the money for the reasons they received it. Other businesses tell us they can’t segregate customer money.
“This comes back to the resilience of a business, [and] how and why they are funding their business in a different way.”
He argued: “If you already segregate, your business is more resilient. If you do not already segregate, you’re depending on customer money to fund your business.”
Budge noted: “A lot has been said about the industry not understanding the objective of Atol reform. We’re looking to improve the resilience of businesses across the sector. We’re not looking to demand greater financial strength from every business.”
He said the CAA is looking to “balance between the mutualisation and the individualisation of risk”, adding: “We recognise the industry is diverse and there are benefits for consumers of choice.
“It’s important we maintain this diversity. The reform aims to balance these objectives.”