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After TCF – TravelManagers moves to protect client funds

August 14, 2014 Headline News, Mobile travel consulting 3 Comments Email Email

egtmedia59TravelManagers has moved to guarantee that the funds of its personal travel managers’ clients are financially secure, from receipt until payment to the relevant travel service providers.

On the eve of its national conference, which begins in Singapore tomorrow (Friday), TravelManagers has announced that it has taken out a Travel Agent Client Trust Account Fidelity Insurance (TACTAFI) policy designed specifically to mirror the Travel Compensation Fund’s previous consumer protection of client monies.

This, together with TravelManagers’ continued maintenance of an audited client account, means client funds received to pay for travel services are protected while in TravelManagers’ client trust account until payments are made to travel providers.

Clients will be assured in writing that payments are held in a dedicated Client Trust Account for which TravelManagers has taken out Fidelity Risk Insurance and that this can be verified by contacting the company’s insurance broker. Clients will be told how to go about processing a claim in the unlikely event of there being a need to make one.

TravelManagers’ move is believed be the furthest that any travel intermediary has gone to guarantee surety of client funds and to provide extensive supporting detail of that fact.

Following the deregulation of travel agents and the withdrawal of the Travel Compensation Fund’s protection role, agents are waiting to see how the situation unfolds as weeks go by. Many agents were surprised to learn that CHOICE, the non-profit consumer advocacy group previously known as the Australian Consumers Association, is to receive funding of AUD 2.8 million over four and a half years, provided from the TCF’s coffers. See: CHOICE uses TCF funds to establish travel watchdog

Others still feel the TCF provided better value for agents, as well as better coverage for consumers, than subsequent alternatives. At least one agent has voiced concern about having to pay expensive premiums and pass the cost on to clients, as he feels it could push up costs and make Australian offerings less competitive with international rivals.

TravelManagers’ move to guarantee financial surety for client funds is further supported by its nominated travel insurance provider (Allianz Global Assistance) whose policiesare able to protect its clients against the insolvency of travel service providers such as scheduled airlines, hotel and resort operators, accommodation providers, motor vehicle rental agencies, bus lines, shipping lines or railway companies. This may actually make it more comprehensive than TCF coverage used to be, as principals (such as airlines) were not covered by the TCF.

TravelManagers travel insurance through Allianz is similar in concept to the new insurance product announced by the Orient Express Travel Group on 30 July.

“TravelManagers has been passionately vocal around the need for mandatory consumer protection to form part of ATAS,” TravelManagers’ chairman, Barry Mayo, said.

“Whilst other travel companies may make broad claims they are offering client surety around the protection of client funds resulting from their own financial failure, TravelManagers has always maintained a clear focus on our clients, by ensuring that all client funds are held in trust in a separate client account.

“We are thrilled and proud to now be the first travel company to provide all of our clients the added protection of a brand new and innovative business insurance product that provides a further level of security to support the integrity of protection for our clients’ funds.”

TACTAFI will provide protection for all client monies that are received by TravelManagers in payment for travel services up until the time that those funds are then paid to end travel providers/suppliers.

There is no opt-in or opt-out – All TravelManagers customers are automatically afforded this extra protection.

“This new business insurance product has been created to protect client funds in the unlikely event that they go missing from, or are not paid into the insured trust account as a result of fraudulent or dishonest activity,” Mayo said.

“If funds are ever found to be missing, the insurance policy will simply reimburse the missing funds directly into the Insured Trust Account. In addition to this, through its travel insurance provider, TravelManagers is also able to offer its clients protection against the insolvency of end suppliers such as airlines, hotels and cruise companies, as part of its traditional travel insurance.”

After reviewing the various optional insurance products on offer, Mayo says in TravelManagers’ view the products available were not ideally suited for their specific requirements, in particular due to the existing use of an audited Client Trust Account already in place for TravelManagers’ clients.

“For this reason TravelManagers entered into discussion with Gow-Gates to explore tailored insurance solutions which could be specifically designed to enhance consumers’ peace of mind as to the security and protection of their funds,” he says.

Fidelity insurance is a commoditised product widely used for other industries, but through further development, refinement and mutual collaboration between TravelManagers and Gow-Gates this new TACTAFI product has been created to specifically address the need to protect funds contained or destined for a client trust account.

“We have worked very hard with the Australian Federation of Travel Agents (AFTA) to provide a range of optional insurance products to compliment ATAS, and to suit the needs of as many industry participants as possible,” says Gow-Gates chief executive Chris MacKinnon.

“We have welcomed TravelManagers’ enthusiasm, direct feedback and engagement with this project, and we are delighted to have been able to collaborate with TravelManagers to create yet another tangible value proposition for travel intermediaries to be able to provide peace of mind to their customers.

“This new insurance product adds value to both the retail travel industry and to customers by further enhancing the protection of consumer funds that are handled within the trust account environment. We are confident this will be widely accepted by the travel industry at large.”

Written by : Peter Needham

Currently there are "3 comments" on this Article:

  1. AgentGerko says:

    I’d like to know why these retail agencies seem to be holding so much client funds. Our sales are mostly credit card or invoice, but on rare occasions when we do take client funds those that are for air must go into our IATA trust account and anything paid for other products such as cruises, tours, etc are paid to the operator on the same day as we receive them from the customer, so why do these places all seem to hold hundreds of thousands in client funds when they close?

  2. Sam Smyth says:

    Very misleading, this is not a real consumer protection for the public, its a policy for agents. Fidelity Insurance will only top up the agents fund if money is missing due to fraud ONLY. So what happens when an agency collapses for another reason, believe it or not Travel Agents just don’t go bust for fraud only in fact is rare and just because an agent has a trust account does not guarantee the publics money will be there when they collapse. What happens if there is not enough money in the trust account.
    Any Travel Agent can buy Fidelity Insurance trust account or not, but the public do not receive direct benefit from it.
    So on paper If Travel Managers collapse tomorrow and the Fidelity Insurance does not pay out because fraud was not involved, the public will not get their money back if there is not enough money in the trust account. If fraud is involved then the public only get the money if the fund is top up and there is enough to pay the public, just because the fund is topped up does not mean the public will still get their money, trusts are not properly legalised and liquidators can get hold of the money to pay preferential creditors.
    Totally flawed concept, why not get proper consumer protection Travel Managers and set a proper example to the trade !

  3. Tanyu Cilek says:

    TravelManagers has always operated an audited fully funded trust account. The funds in our client account legally belong to our clients, not TravelManagers and not our personal travel managers. The fidelity insurance tops up our client account in the unlikely event that any are fraudulently missing. This means our clients own the funds in our client trust account and fidelity insurance is in place to protect our clients’ funds. Liquidators can only access a client trust account if it has not been properly maintained. TravelManagers has had legal advice and is comfortable that the integrity of our client account is being properly maintained.

    Tanyu Cilek
    Finance & Commercial Manager
    TravelManagers Australia Pty Limited

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