Abta urged customers holding refund credit notes (RCNs) for Atol-protected holidays to rebook after the CAA warned RCNs worth £85 million remain unredeemed and advised consumers to book or request a refund by September.
Alan Bowen, legal advisor to the Association of Atol Companies (AAC), warned: “This will cause some financial difficulties if companies issued a lot of RCNs [and] have not allowed for some customers not taking a holiday and wanting their money back.
“The fact the CAA said ‘use it or ask for your money back’ has implications for people who issued an awful lot of RCNs.
“There will be businesses that wish the CAA had kept quiet.”
Bowen added: “It’s a wake-up call for customers. There is less than six months before these RCNs become worthless. Companies will have to provide £85 million-worth of holidays or the cash by September. It’s vital we have a good spring and summer. If everyone asks for their money back, it will be an issue, but I don’t think they will.”
The CAA noted on Tuesday: “Holidaymakers with unspent refund credit notes risk losing their money if they don’t redeem them by September 30, 2022, when they lose Atol protection.”
It issued a similar warning last November when unspent RCNs totalled £130 million.
Bowen noted £45 million-worth of RCNs “have been used to book holidays” since the previous announcement.
The £85 million value of outstanding RCNs caused some surprise. Abta chairman and Blue Bay Travel chief executive Alistair Rowland said: “This came out of the blue – it feels a large number.” He added: “If the CAA had said ‘Book a holiday or talk to your agent about other options’ it might have been more helpful than ‘request a refund’.”
A CAA spokesperson confirmed there were £85-million worth of unredeemed RCNs “not converted to cash or a new booking” at the end of March. The spokesperson said: “We want to make sure consumers are well informed, don’t forget they hold vouchers and are aware of the terms of Atol protection and when it expires since there is now less than six months remaining.
“Consumers can redeem the RCN beyond the end of September, subject to any expiry terms, but after September 30 they would not benefit from Atol protection.”
Bowen noted: “Companies can do as they wish if they want to offer more [protection], but some may say ‘The date on the RCN is clear. It’s no longer valid’.”
Rachel Jordan, Abta director of membership and financial protection, said: “We’d encourage any customers who have unused Atol-protected RCNs to rebook before September 30 to avoid losing protection. Any new holiday booked with the RCN will then be subject to the normal protection arrangements regardless of when they’re due to travel.”
However, Simon Cooper, chief executive of OTA On the Beach, insisted the CAA should mandate that all travel firms who issued as-yet unredeemed RCNs should write to customers, and urged those holding RCNs to demand refunds.
“It simply isn’t right that people’s hard-earned cash is lining the pockets of the travel companies who, during the pandemic, used these ‘IOUs’ as a short-term solution to their own cash flow problems – instead of refunding people in cash for their cancelled holidays,” he said.
“We highlighted a number of our concerns about Refund Credit Notes in a white paper published in June last year. I will repeat what I said then and urge anyone with an unused RCN to call their travel provider today and ask for a full cash refund.”
The CAA and Department for Transport confirmed Atol protection of RCNs for cancelled Atol bookings in July 2020. The scheme was subsequently extended to apply to RCNs issued from March 10, 2021, up to December 19, 2021.