Abta chief executive Mark Tanzer has confirmed Abta “will not underwrite” the consumer financial protection of members using trust arrangements, which it will accept for the first time from March.
The association announced the policy change in late November, making clear it won’t financially protect or manage the arrangements or handle claims, and financial protection director Rachel Jordan confirmed in December: “We’re taking this approach for the March renewal.”
That led Alan Bowen, legal advisor to the Association of Atol Companies (AAC), to warn: “Abta needs to be careful. It needs to stand behind its logo. It needs to say to trust providers, ‘We need some form of indemnity if money is missing from the trust account’ because if a company fails and the money is not there the value of the Abta [brand] has gone.”
However, Tanzer told Travel Weekly: “We’ll accept trust arrangements, [but] the trust organiser – those responsible for the arrangements – will need to stand as a backstop to it. We won’t underwrite it. If the trust turns out to be deficient, if it doesn’t do what it says, there will be a breach of the law.”
He insisted: “We want to provide choice to members provided we’re assured the trustees will do their job.”
Bowen acknowledged the move was inevitable, saying: “Some Abta members would rather run trust accounts. About 30% of AAC members say they’ll look to trust accounts. Companies are being asked for bigger bonds and feel trust accounts could be cheaper. It depends on the trust arrangements.”
But quoting a former Abta head of finance who described financial protection as “a noose around Abta’s neck”, Bowen suggested: “If Abta could get out of financial protection it would.”
Tanzer rejected that, insisting: “Bonding is a really important service – a service our members want. It’s the lowest cost, easiest way to comply with the regulations and it offers a choice for members.”
Leading industry accountant Chris Photi, head of travel and leisure at White Hart Associates, said: “Abta realised they have to allow trust accounts, but they should have done it a year ago.”