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AFTA robustly defends ATAS after agency collapse

May 26, 2015 Corporate, Headline News 2 Comments Email Email

egtmedia59The collapse of CTS Travel Services in the Melbourne suburb of Altona Meadows does not reflect badly on ATAS, AFTA general manager Gary O’Riordan said yesterday.

O’Riordan confirmed that the collapse, in which the firm went into abrupt liquidation earlier this month, was the first case of an ATAS-accredited agency going bust since ATAS succeeded the TCF over 11 months ago. A number of sudden closures of travel companies have occurred during that time, but they were not ATAS accredited.

“This is the first and only collapse we’ve had in almost 12 months of operation, as opposed to the old TCF regime where you used to have anything between 15 or 20 collapses a year,” O’Riordan said.

CTS Travel Services has been placed in the hands of Queensland liquidator, Robson Cotter Insolvency Group. A meeting of creditors was held on Friday at 101 Collins Street, Melbourne. Reg Eustace was elected chairman and it was resolved that the meeting be adjourned for 14 days (to Friday 5 June 2015) and switched to a venue more convenient for most creditors, in the City of Hobsons Bay.

O’Riordan said there appeared to be circumstances behind the collapse that would have made it very hard to stop. AFTA is already on record as saying the closure appeared to “relate to matters that require police investigation”.

O’Riordan told Global Travel Media the background to the collapse had nothing to do with the fact CTS Travel Services was ATAS accredited. Neither did it bring into question the ability of ATAS to vet businesses.

“The finances provided to us [by CTS] were fine to pass the assessment when they applied back in October or whenever they became accredited last year,” he said.

O’Riordan continued: “It is our firm view that ATAS has elevated standards across the industry – because there are more checks now. We have over 3000 agents who are accredited, with another 400 in the pipeline and of those, we are able to assess that they meet the criteria.”

Previously, many agents didn’t hold certain insurances and didn’t have complaint handling procedures in place, he said.

“All these things are minimum requirements under ATAS. So in our view, across the board, for all those who have chosen to go down the path of accreditation, we have certainly seen an increase in compliance.”

O’Riordan said ATAS ran four “solvency test ratios” across businesses that applied to become members. The assessors had accounting qualifications and experience in compliance and assessment of businesses.

“Our compliance manager is eminently qualified, with over 15 years experience in this field.”

Consumers are understandably concerned that whereas the TCF covered them in the event of agent defaults, the current regime does not. But O’Riordan said there were provisos in the previous system.

“If you paid by credit card the TCF wouldn’t give you your money back; the first thing they would do is to ask you to see your card issuer and try to get a chargeback.”

Written by Peter Needham

Currently there are "2 comments" on this Article:

  1. AFTA is right to say that the best way for travellers to protect themselves against travel agency insolvency is to pay by credit card, so as to avail themselves of the chargeback facility, if the travel service cannot be provided .
    I say this because travel insurance for cancellation and lost deposits rarely covers travel agent insolvency, although it often covers travel service provider insolvencies (accommodation, tour operators, airlines).
    If you look at how much of the travel industry’s money the TCF has left over, the TCF was doing a great job in not paying many worthy claims because of the narrow way in which it interpreted eligible claims.
    My only suggestion is that on the ATAS Website there is a prominent statement that PAYMENT BY CREDIT CARD IS RECOMMENDED TO PROTECT PAYMENTS

  2. Robyn says:

    Firstly the TCF did NOT have 15 or 20 collapses a year , lets stick to facts
    The company went under due to fraud, so it would not have been picked up by the TCF or ATAS.
    What is questionable is for directors to be still be employed in the industry with the ability to handle money.
    PS that was a subtle hint! No the website should not advise clients to pay by credit card as some companies have parent companies based outside Australia and therefore have insolvency insurance. Does it reflect poorly on ATAS, probably but i dont think any agent is teflon coated against the publicity in this event.

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