What is happening?
On 1 July 2014 the travel industry became a deregulated market, and the compulsory licensing scheme for travel agents was abolished and a voluntary accreditation scheme called the ATAS was brought in. Travel agents will also no longer need to be members of the Travel Compensation Fund, which used to provide compensation to consumers when travel agents went bust.
What was the Travel Compensation Fund?
The Travel Compensation Fund (TCF) was established in 1986 to provide a system of compensation to consumers who lose money when a travel agent ceases trading due to financial collapse.
When travel agents go bust, consumers can be left out of pocket for service, such as flights or accommodation, which they didn’t get a chance to use. The Travel Compensation Fund used to collect payments from travel agents and used the money to compensate consumers if this was to happen to them.
The Fund is now being wound down.
What is the ATAS?
The ATAS is a voluntary accreditation scheme run by the Australian Federation of Travel Agents (AFTA). It aims to provide assurances for consumers that a travel agent is creditable and professional.
What does the ATAS offer consumers?
ATAS accredited travel agents will be required to follow a code of conduct aimed at providing quality assurance for consumers. The scheme will also include a complaint mechanisms and minimum standards on staff training.
Accredited travel agents will be required to provide ATAS with some regular reports showing their ability to meet their financial obligations. However taking out insurance policies protecting consumers in the event that the travel agent goes bust, the main function of the old compensation fund, is only optional. That is why it is worth asking your travel agent what steps they have taken to protect your funds.
What about my Australian Consumer Law rights?
Your ACL rights will continue to apply to travel products and services, and they do for other products and services.
Why is this happening?
Since the Travel Compensation Fund was created, the travel market has changed significantly. Today it is common for consumers to bypass travel agents all together with the use of online booking tools and comparison sites. Many of these services providers do not need their own travel agent licences, especially if they are based overseas, which they often are.
CHOICE argued that the Travel Compensation Fund should be reformed and not abolished, but the decision to close the fund was made in late 2012.
What should consumers do?
Whether you’re booking online or with an agent, you have rights under Australian Consumer Law. If you pay with your credit card you may be able to get a chargeback if something goes wrong, but keep in mind that credit cards can attract hefty surcharges and high interest rates. There are a few other things you can do to make sure your holiday goes as planned.
When booking through travel agent:
- Book through a reputable agency or supplier – do your research first, and maybe ask friends and family for recommendations
- Look for an accredited agent
- Because insolvency insurance is now optional, ask travel agents what steps they have taken to protect your funds
- Check out their terms and conditions, including refunds and complaints policy
When booking online:
- Look for basic online security features, such a padlock symbol and address on the website payments page starting with ‘https://’
- Make sure the seller has contact details, and assess their processes for handling complaints and solving problems
- Read the fine print before buying anything