Authority says non-return of payments from airlines is no defence. Ian Taylor reports
The Competition and Markets Authority (CMA) has served notice on the industry that it will “use all the powers” at its disposal to ensure travel firms “comply with the law” on refunds.
CMA consumer group director Hayley Fletcher repeated the warning issued in a CMA open letter to the package travel sector on May 13 when she addressed the Abta Travel Law Seminar last week.
The letter clarified the CMA’s view in two key areas, on Foreign Office (FCDO) advice and where airlines withhold refunds.
Where travel organisers delay making full refunds “until they receive back payments made to airlines or accommodation providers”, the CMA noted: “Organisers are legally obliged to refund consumers irrespective of whether funds are first received back.
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“The fact that an organiser has not been refunded by third parties does not in any way relieve organisers of their duties under the Package Travel Regulations.”
This will be a key consideration in light of the lengthy amber list of destinations to which airlines are scheduling flights but to which customers may choose not to travel.
The CMA letter made no mention of the government’s traffic light system but confirmed the industry view that FCDO advice remains decisive in deciding whether a package holiday can proceed to a destination.
It noted: “In general, the existence of FCDO advice against all but essential travel amounts to compelling evidence of ‘extraordinary and unavoidable circumstances’ . . . [and] reflects its assessment that UK travellers would face a level of risk it deems unacceptable for non-essential travel.”
This view “is reinforced by the fact that most travel insurance policies exclude cover if the policyholder travels to a destination against FCDO advice”.
“Accordingly, where consumers terminate their package because around their departure date there is FCDO advice against travel to their destination or its immediate vicinity . . . they are likely to be entitled to a full refund. The fact that the flight is still operating and accommodation open is not of itself sufficient to deny a full refund.”
The CMA has left vague its view on the timing of a customer’s cancellation, but “around their departure date” suggests it must be close to that date.
It also adds a caveat, noting: “We expect any operator seeking to refuse a full refund, notwithstanding FCDO advice, to explain fully the basis upon which they disagree . . . and to provide detailed information about the evidence on which they have relied. The organiser would need to be ready to defend their stance in a court.”
The CMA warns that any attempts to waive or restrict refund rights are “not binding” and would be “likely to be unfair”, noting this may be relevant “when considering FCDO advice”.
More: CMA holds fire on court action as Teletext agrees to pay £7m in refunds