Holidaymakers Putting Millions at Risk due to Confusion about Financial Protection
January and February are the busiest months of the year for travel bookings, but 80 per cent of us snapping up our dream getaway are confused about whether our holiday money is safe, according to one travel company.
Travel Counsellors is calling for greater transparency in the way travel companies tell holidaymakers whether they are protected or not.
If you pay for a flight through a travel agent your money is protected isn’t it? That’s what four out of ten of us believe according to a survey of 2,000 people undertaken by Travel Counsellors.
But the answer to that question is only ‘maybe’: if you book a charter flight you’re protected (through the government’s ATOL scheme, though the definition of a charter flight is now confusing), but if you book a scheduled or low-cost flight your money isn’t safe if the company goes bust.
We are living in difficult financial times and it’s blindingly obvious that people need to know that their hard-earned money is safe....
Did you know that organisations like the Association of British Travel Agents (ABTA) only financially protect cruises, coaches and rail travel and haven’t offered financial protection to consumers since 2006 for more popular travel?
An ABTA bond now simply means it protects the tour operator’s money in the event a travel agency collapses. Only 12 per cent of the respondents to Travel Counsellors’ survey actually knew that ABTA doesn’t offer consumer financial protection.
David Speakman, Travel Counsellors’ chairman, said: ‘The way the travel industry and government has set up financial protection for holidaymakers is frankly flawed and ridiculously confusing.
“We are living in difficult financial times and it’s blindingly obvious that people need to know that their hard-earned money is safe.
“Financial protection in the travel industry is now such a jigsaw puzzle that many travel companies are as confused as customers and people are booking holidays thinking their money is protected when it’s not.”
“OK”, you might say – “so I’m going to book my flight and hotel through the same company or website - that makes it a package holiday, so my money will be safe once I’ve paid for it won’t it?” The answer is -unlikely.
If you book through a low-cost airline and click through to another site to book the accommodation, your money isn’t safe if that airline or hotel company collapses. If the airline has its own hotel service you may be.
Confused yet? Thousands of us are. Yet, the same Travel Counsellors’ survey shows that 85 per cent of Britons consider financial protection to be important when booking a holiday and for 20 per cent it was the very top priority (second only to value for money).
Travel Counsellors has been so concerned by the current travel industry financial protection system it set up its own financial trust six years ago so that anything anyone books through the firm is financially protected.
David added: “So we’re calling on the Advertising Standards Authority and the government to ensure that each and every layer of protection is properly explained.
“Travel companies can’t just say in their marketing that they are ‘fully bonded’ without explaining whether that covers the customer for everything that they are booking.”
“Everybody booking a holiday this weekend just needs the facts. We need to know at the time we book if our money is safe.
“That’s why Travel Counsellors now wants to hear from people who think they’ve been misled, or who see sites which confuse them so we can pass on their complaints and make sure the travel industry sits up, makes things crystal clear and doesn’t hide behind misleading language,” he said.
Travel Counsellors has drawn up a flow diagram - here - which people can use to understand if they are protected or not, depending on where and what they book. But be warned it is complex.
David said: “I’m incensed that people are facing a confusing jigsaw of financial protection and don’t know what it means, but I’m even more infuriated that such a muddle exists in the first place.
“The differences in protection when people are trying to book a holiday from different companies are simply down to the vested interests in travel businesses and the strength of the airline lobbying brigade.
“I wouldn’t expect to buy a fridge and have to pay someone some extra money as insurance in case that fridge company goes bankrupt before my goods are delivered. Why should this situation be the case in the travel industry?
“The expansion of the Atol scheme by the CAA is too small a step forward and ABTA's limited consumer cover and confusing message about how it protects them just increases the need for clarity.”
Travel Counsellors is now writing to the government and ASA to highlight the issue this week and to call for a change in the way that advertising standards on this issue are monitored.
David concluded: “In the long-term I’m calling for an independent ‘travel bank’ to be established so an independent financial organisation holds customers’ money before they travel– not the travel companies themselves.
“Then everybody will know where they stand. It will allow the industry to obtain commitment from the customer but prevent travel companies from losing customer money before they received what they have booked.
“This will take time because tour operators’ cash flows are now dependent on getting money very far in advance, but it’s the right thing to do for holidaymakers and the reputation of the industry. It’s simply got to change.”
Travel Counsellors is also encouraging people to email with news of any issues they’ve faced to [email protected], or to discuss this with @tcworldwide using #amiprotected. Travel Counsellors will pass these complaints and comments onto the ASA and government.
FemaleFirst @FemaleFirst_UK