Article published in Travel Weekly on 4 August 2022.
“A leading consultant to the trade believes the CAA has moderated its ATOL reform aims and will not enforce segregation of customer money as once feared.
Travel Trade Consultancy director Martin Alcock, a former senior analyst in the ATOL department of the CAA, believes a hybrid scheme permitting segregation, bonding or insurance to protect customer money or a mix of these, is the most likely outcome of the reform.
However, the CAA’s view of the relative ‘risk’ of an ATOL holder’s arrangements will likely be reflected in the rate of ATOL Protection Contribution (APC) businesses pay on each booking, with those wholly segregating customer funds paying lower rates.
The CAA’s ATOL Reform consultation in April 2021 proposed sweeping changes to the regime, limiting use of customer money for advance payments to suppliers and introducing ‘risk pricing’ via a variable APC. Options for protecting customer money included total or partial segregation in trust or escrow accounts, a return of universal bonding or a combination.
The consultation sparked a record 300-plus industry responses, and the CAA’s summary of these, published in May, made clear most were firmly against a one-size-fits-all approach and compulsory segregation of funds.
The CAA noted: “Many considered the system…unworkable.”
Alcock said: “The CAA’s initial rhetoric around Atol reform came at a time when we were seeing the CAA push all new Atol applicants to trust accounts.” He said the consultation presented “a somewhat simplistic view” and described the proposals as “ultimately untenable”.
But he noted: “We’ve definitely seen a change. In mid to late-2021, the CAA started to roll back. The responses to the consultation, detailing what this means for a tour operator, for an agent, for an online travel agent, may have had an impact.”
Alcock argued “it wouldn’t benefit consumers to destroy Atol-holders’ business models” and said the CAA is likely to settle on “a variable approach, like what we have now for companies with more than £20 million in Atol revenue, with a variable APC”.
The CAA has promised a detailed consultation “later this year”.”
If you would like help understanding how the ATOL consultation might affect your business, please get in touch.