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7th collapse since end of TCF. How many more will it take?

November 13, 2015 Headline News, Travel Law 3 Comments Print Print Email Email


The collapse of Parramatta-based Value World Travel with “hundreds of travellers being left $3 million out of pocket and others stranded” (in the words of one consumer media report) has driven many in the industry to ask: “How many more agency collapses will it take for Government to take action?”

Since the disestablishment of the Travel Compensation Fund (TCF), seven travel agencies are reported to have collapsed since 5 May 2015 – with Value World Travel being the seventh. Consumer losses as a direct result of these collapses are estimated to have topped AUD 4.5 million.

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From Value World Travel website, now offline

“If nothing else, these losses alone prove consumer protection against fraudulent actions of their travel agency is clearly no longer existent,” TravelManagers’ Chairman Barry Mayo said yesterday.

Mayo strongly believes the state governments are guilty of disbanding the TCF without ensuring the travelling public was provided with an effective form of consumer protection against travel agent insolvency.

It can no longer be disputed, Mayo says, that consumer losses now being experienced result from state governments disbanding the TCF and replacing it with “an ill-thought-out industry accreditation scheme that failed to demand robust financial criteria or deliver consumer protection.

“Government and individual members of the industry need to acknowledge these consumer losses are not going to cease and recognise that an accreditation scheme without consumer compensation is worthless from both consumer and industry perspectives.”

It’s vital for the travel agency community to remember that AUD 25 million dollars of TCF funds, contributed by travel agents remains, intact, Mayo points out.

“Immediate steps need to be taken to ensure these funds are used to reinstate a more robust financial oversight of the industry and provision of consumer protection. If action is not taken quickly to secure these funds to be used to protect the consumer as originally intended, this money paid by the travel agency community will be swallowed up into government funds and be accounted for as part of general revenue.”

Mayo recognises that the collapsed travel agencies may have also have failed under the TCF. However, he points out, their customers would not have been out-of-pocket.

“We recognise there were shortcomings in the TCF as it previously stood and that with goodwill and common purpose these can be addressed to ensure a new replacement to the TCF is more equitable than some may have perceived.”

The situation being experienced by these customers is precisely what TravelManagers and CHOICE Consumer Advocacy (CHOICE) feared in their original submissions to Government.

TravelManagers is a true customer advocate and Mayo has passionately lobbied from the outset that the industry needs to offer some form of universal consumer protection, sentiments that were echoed by CHOICE in submissions to the Council of Australian Governments back in October 2012 in response to the COAG’s Draft Travel Industry Transition Plan.

“CHOICE does not agree with the core proposition of the Travel Industry Transition Plan (‘the Plan’) which calls for the abolition of the Travel Compensation Fund (TCF). We are not convinced that the replacement initiatives proposed (such as private insurance and credit card chargebacks) will satisfactorily address the problem of consumer loss due to agent insolvency.”

Thirty years ago, uniform legislation was first introduced throughout Australia to provide consumer protection for the customers of defaulting travel agents. The Bills purpose was simple – to provide for the licensing of travel agents. It was seen as an important advance in consumer protection, as it was recognised that the incompetence or dishonesty of a travel agent could destroy a trip for which ordinary people have saved for a long time and which they may never have the chance to repeat.

“This sentiment is still as real and valid as it was 30 years ago, however with the abolishment of the national scheme including the TCF, which provided consumers with some recourse should their travel agent become insolvent, [the protection] is no longer.

“It is the consumer that is the biggest loser combined with declining consumer confidence in travel agencies growing with each negative media report,” Mayo reflected.

Edited by Peter Needham

Currently there are "3 comments" on this Article:

  1. AgentGerko says:

    My biggest fear is that the governments, who are unlikely to admit they erred in closing the TCF, will form an alternate plan involving something like compulsory insolvency cover for every agency at a cost far exceeding what the TCF cost per agency. We are already encouraged by AFTA to take out supplier insolvency insurance despite the great cost of such policies and the fact they do not provide across the board cover.

    The simple solution is to reinstate the TCF and make any company that takes travel money from a member of the public in Australia, whether they be agency, tour company, airline, cruise line, etc mandatory to participate with their contribution being related to their turnover. So a big airline (remember Ansett) would be required to contribute more than a small agency because of the greater exposure in case of a collapse. Yes, passengers who elect to buy from the website of an offshore company would not be covered but that is a risk they elect to take, and some of the money AFTA whas wasted on ATAS could be spent educating the public that offshore means at your risk.

    This is not just a travel agency issue. This is an industry wide issue and the public needs to have confidence that whatever they buy and whoever they buy it from, as long as its done with TCF member their money is safe.

  2. robyn lawley says:

    Actually Barry, your swinging on the fence is making me dissy – No – Yes – No , Choice said nay then changed their mind when they sniffed the cash to the tune of about $3m, Government would not have gone down this path had they received a straight out NO from AFTA however the board of the time was NOT industry focused but lobbied for self purpose. The recent ad from ATAS also rubs me up the wrong way, professionalism and ethics – hahahaha I dont find flight centres underquoting
    either professional or ethical to the travel industry. We have indeed found ourselves in a precarious position, all done of our our own making for letting others make bad choices on our behalf. Maybe its time for agents to step up to the plate and seek a retraction from the local members of government.

  3. Andris says:

    Mr Mayo and Agent Gerko are right on the effective deregulation of the industry was a mistake .When the intent is to deregulate you have to ask who the winners are .The loser’s are always the weak and voiceless , consumers .

    Lobbying politicians is always a hard ask if it involves policy reversals .

    The consumer movement is disorganized and the TCF abolition was in part due to some sections of the TI lobbying/supporting the changes

    I would welcome Mr Mayo as a TI member taking a lead on the TI behalf and lead the battle to restore a new version of the TCF , possible by starting a Change.org petition seeking a urgent government review of all the issues that are now evident post 1/7/146

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