Experts welcome Abta bond changes Ian Taylor


A relaxation of Abta rules on bonding, including new options for ‘principal’ or tour operator members to meet the association’s financial requirements, have been welcomed by senior industry figures. Abta gave notice last month of


increased bond-renewal options to apply from July 1 as well as changed criteria for assessing members’ finances, to apply from July 2026. The changes follow criticism


of Abta’s bonding demands during the pandemic when it switched to calculating bonds based on the peak amount of customer funds held by members rather than a smaller percentage backed by insurance against a ‘shortfall’ in the event of failure.


Abta bonds provide protection


for non-Atol packages and other non-flight arrangements protected by the Package Travel Regulations, as well as ‘pipeline’ money held by retail members (agents). Pipeline bond levels remain


unchanged, but as well as offering principal members a ‘peak-period’ bond assessment as now, Abta will also offer a lower bond backed by insurance through a scheme it calls Principal Premium+. Leading industry accountant


Chris Photi, a regular critic of Abta’s bond requirements, hailed the changes as “significant”, saying: “It makes eminent sense to offer alternatives to peak-period bonding. Smaller firms will have greater access to bonds.”


Trading Standards calls for powers to enforce the PTRs


Ian Taylor


Trading Standards has called for new powers to prosecute travel companies while adding its voice to demands to scrap or reform the Linked Travel Arrangement (LTA) provisions of the Package Travel Regulations (PTRs). The Chartered Trading Standards


Institute (CTSI) demanded it be brought in line with proposals to enhance the powers of the Competition and Markets Authority (CMA) and CAA in a document, ‘Wish You Were Clear’, addressed at PTRs reform.


4 8 JUNE 2023 However, Abta has expressed


concern at regulators gaining powers to impose fines without going through the courts. Speaking in March, Abta director of legal affairs Simon Bunce noted proposals to grant the CMA powers to rule on breaches of consumer law and impose fines, saying: “We’re concerned it may not result in fair outcomes. The CMA’s mission is to ensure consumers get a fair deal. That is good but should not be the basis for interpreting the law. Courts interpret the law.” The government proposes similar powers for the CAA and Bunce


It makes sense to


offer alternatives to peak-period bonding. Smaller firms will have greater access to bonds


However, Photi criticised a


lack of guidance on how insurance premiums will be calculated. Alan Bowen, advisor to the


Association of Atol Companies, agreed, saying: “If insurance is readily available, this will be positive.” But he noted: “You would have to look at the premiums. It will make a difference to those with larger bonds. Those with small bonds may see little benefit.” Bowen added: “This is due to


members’ demands. A lot of bonds went up after Abta got worried about the level of money people were holding with refund credit notes.” Abta’s move to peak-period


bonds was triggered by the explosion of refund credit notes during the Covid-19 shutdown and by the failure, in July 2020, of Cruise & Maritime Voyages which resulted in a £12.7 million loss to Abta’s ‘captive’ (inhouse) insurer. Rachel Jordan, Abta director of


membership and financial protection, said: “These changes have been warmly received by members. “They’re designed to simplify


rules and processes, with reduced reporting requirements and new


flexible bonding options.” i Comment, page 47


The Chartered Trading Standards Institute has issued a document about PTRs reform entitled ‘Wish You Were Clear’


warned Abta members: “If you disagree with the CAA, you must be mindful it’s your regulator.” The CMA enforces general


consumer protection, the CAA runs Atol protection and Trading Standards oversees the PTRs. The Department for Business and


Trade has promised a consultation on PTRs reform, leading the CTSI to call for action on LTAs and simplified PTR information rules after a survey of 1,000 consumers found three in four barely read booking terms. Trading Standards lead officer for travel Bruce Treloar told Travel


Weekly: “Does anyone – businesses, consumers, regulators – understand LTAs? My feeling is: ‘No one is selling them, let’s get rid of them’. But we need some way to protect a holiday that is not a package.” The CTSI also wants a sector-


specific offence for travel businesses of providing incorrect, false or misleading information to consumers. Alan Bowen, advisor to the


Association of Atol Companies, described this as “sensible”, saying: “It would be easier to prosecute.” Bunce noted: “This is already part of Abta’s code of conduct.”


travelweekly.co.uk


PICTURE: Shutterstock/icemanphotos


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