Published on Friday, April 30, 2021
The UK Civil Aviation Authority launched a consultation on the ATOL protection scheme, which will consider evolving the regulatory framework to improve financial resilience.
At present, some ATOL protected travel businesses use their customers’ advance payments for their holidays to fund their own operations, before the customers take their holidays.
While this is a long-standing practice in the industry, in some cases it may fail to incentivise robust financing arrangements.
Proposed changes will examine new regulatory options to reduce the risk to consumers when individual travel business cease trading
It comes as the Covid-19 pandemic has highlighted how challenging it has been for some businesses to pay refunds to which customers were entitled to.
The consultation period will close on 30 July 2021.
The UK Civil Aviation Authority will then consider all recommendations before launching a second consultation making specific proposals in early 2022.
Paul Smith, Director at the UK Civil Aviation Authority, said: “The ATOL scheme exists to protect consumers, and it is therefore right that we work to continually strengthen its financial resilience. Following several large ATOL failures in recent years, we have become concerned about the impact of businesses using consumers’ money as a source of funding working capital. “
“That’s why we are seeking people’s views on changing these arrangements to further enhance ATOL protection of customers’ money.”
“The travel industry can be reassured that we understand the impact that the Covid-19 pandemic has had on their finances. We will take full account of the need to allow industry to adjust to any new arrangements that will be implemented,” Smith added.