27/05/2022

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Saved By Business

Travel giants to ringfence customer deposits to speed up refunds

2 min read

Firms ordinarily use getaway deposits as a important component of funding their company. The journey sector lifeboat Atol was developed in 1971 to action in if a corporation failed and the cash was shed.

Ringfencing customer hard cash, a widespread practice in other industries these kinds of as banking and gambling, would mean companies would not be able to use the cash handed over when scheduling.

Firms at present reapplying for their annual renewals will have to set up segregated accounts, sources stated. Providers will be limited to a amount of bookings based on the volume of hard cash they concur to maintain in belief.

Martin Alcock, a director at the Vacation Trade Consultancy, stated that even though there had been a good deal of positives to segregating customer deposits, they had been “not a panacea”. “They can be painful to set up, and they tie up a good deal of hard cash… Quite a few journey enterprises will be unable to afford them,” he stated.

The options are aimed to also address fears that the taxpayer-backed Atol plan is insufficiently capitalised.

Labour MP Meg Hillier, chairman of Parliament’s public accounts committee, stated: “The flaws in the journey sector product have remaining customers at the bottom of the heap for too extensive. When a company goes bust or a flight or getaway is cancelled, customers normally struggle to get their tough-attained hard cash back in any sensible time.

“A new product that safeguards shopper hard cash is overdue. It will improve the functioning product of quite a few journey companies but it will offer considerably-required shopper defense. The collapse of enterprises and Covid have highlighted what can go incorrect.”

The CAA did not comment.