Enter the regulator

By | Category: Travel news

There has been an ever-growing list of complaints that the Competition and Markets Authority (CMA) has received about the tardiness (the softest word I can use) of some travel companies to repay monies spent on holidays and flights which have been cancelled.

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If your holiday is cancelled a cash refund is due – if you prefer this to a voucher.

Now the CMA is showing its teeth by announcing an investigation into the tens of thousands of complaints it has received.

It has also issued some fairly precise guidance reminding companies of the law under EU261 and the Package Travel Regulations that this money must be repaid in cash if that is what the client wishes and not in vouchers.

This isn’t just a UK problem it is one throughout all EU countries and titis planning to look at the situation as well.

But, as Just about Travel wrote almost a month ago, companies may not have the cash to repay leaving them with only one option – to close down.

Why have they no cash if they have received money from travellers?

Partially it is because they will have passed it on to their suppliers such as hotels and airlines. Partially it is due to using the money to pay day-to-day running costs.

Up until this pandemic, travel companies have generally not ring-fenced customer monies so there was sufficient to repay everyone because the situation has never arisen before. Yes, they can make a percentage of refunds but not to everyone and that is why ABTA has been trying to get the UK government to amend the law to allow vouchers to be provided.

Whatever the outcome, travel companies will have to consider how to protect customer monies in the future so that everyone can be repaid if such a terrible event happens again.

But the law is the law and those monies must be repaid if  that is want a customer wants.

If you have an outstanding refund due and you are being fobbed off, contact the CMA.

TUI, one of the heavily criticised companies, issued a statement saying that refunds were delayed due to the large number of requests that it had received. It has said that it hopes to refund everyone who has so far claimed by the end of next week. It says refunds are taking about four weeks. But it is also tempting bookers with an offer of a voucher of 120% of the amount that customers have paid in order to try and preserve some cash.

Other companies will not have sufficient reserves so may go to liquidation to avoid the debt and re-start. That isn’t an unheard-of practice so holidaymakers and travellers should be wary of any company adopting this approach and re-surfacing as a tour operator or travel agent shortly afterwards.

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