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ATAS insolvencies – CHOICE warns of shortcomings

September 22, 2015 Business News, Headline News 1 Comment Print Print Email Email

egtmedia59Consumer advocacy group CHOICE has sounded the alarm over the deregulated travel industry environment that has evolved since the abolition of the Travel Compensation Fund last year. It has pointed the finger at perceived shortcomings in AFTA’s Travel Accreditation Scheme (ATAS).

“With two ATAS agents becoming insolvent in 2015 so far, there are concerns that the scheme may not be successfully ensuring that accredited agents embody the desired level of expertise, professionalism and business acumen,” CHOICE notes in its newly released submission to the First Year Review of the ATAS Charter and Code of Conduct.

CHOICE says that ATAS is becoming better known publicly, with awareness of ATAS among respondents to a recent survey reaching 19%, while AFTA had an awareness rating of 29%.

“Awareness of ATAS may appear low, but after only 12 months in operation 19% is respectable.”

CHOICE was more critical of other aspects of industry regulation, or lack of it.

“Without licencing requirements the industry is at risk of attracting people with little industry knowledge or business skills, increasing the likelihood of travel agent collapse or fraud,” it noted.

CHOICE has urged ATAS to compile and release a report detailing “the known ATAS accredited agents that have become insolvent over the last 12 months and whether or not consumers affected were adequately protected and compensated.” The report should be annual, CHOICE adds.

CHOICE stresses the necessity for ATAS to “prevent unsuitable applicants being granted accreditation in the future”.

While the aims of CHOICE and AFTA are broadly similar, in raising consumer awareness of best practice and potential pitfalls of buying travel, CHOICE’s first duty is to consumers. Both organisations have received funding from the now defunct Travel Compensation Fund (TCF), which CHOICE mentions several times in its submission.

In an overview, CHOICE states: “The replacement of the former licencing requirements and the Travel Compensation Fund with industry self-regulation and the ATAS scheme has reduced consumer protections.

“Recently, a number of travel agents have ceased trading and consumers have found themselves out of pocket. The estimated collective loss of over $1 million demonstrates that stronger protections are required.”

CHOICE notes that many of the collapsed agents were not AFTA members “but this is little comfort to the consumers who had purchased a holiday and lost their money. Under the previous scheme, loss of this kind was covered by the Travel Compensation Fund”.

Several in the industry advocating a return of the TCF have made the same points.

CHOICE, however, stops short of calling for overall consumer protection of the type the TCF provided, though it comes pretty close.

CHOICE sees the ATAS review as a chance “to strengthen and enhance the scheme”. It says ATAS should survey accredited members and collect data on measures being taken to protect clients against their insolvency.

“The data should be aggregated and released publicly so that government, CHOICE and other stakeholders can assess the extent to which consumers are protected. This survey should be conducted every 12 months.”

One recommendation is that “AFTA categorises the enquiries, complaints, breaches and outcomes of investigations. That AFTA make these statistics and findings publicly available”.

Other CHOICE recommendations:

  • ATAS should survey complainants, travellers who have made an enquiry to AFTA or ATAS but were ineligible to complain via the scheme, as well as the scheme participants to gauge the satisfaction of travellers and scheme participants. The survey should be developed in conjunction with consumer representative organisations and the findings of the survey be made public.
  • The ATAS Charter and Code of Conduct be reformatted to be made more user-friendly. This includes removing “commercial in confidence” from publicly available copies of the documents, and making a clearly designed dispute scheme flowchart available to the public.
  • That AFTA staff be excluded as members of the AFTA Code Compliance Monitoring Committee (ACCMC), and that the AFTA chief executive be replaced [on the ACCMC] with an AFTA-sponsored industry representative.
  • That a separate secretariat be created for ACCMC so that reviews are produced by someone other than the Compliance Manager.

Related points by CHOICE:

  • CHOICE is aware of only one consumer travel insurance product which covers travel agent insolvency. (It’s Express Insurance by QBE.)
  • Research shows 56% of travellers who purchased travel insurance either believed or assumed that their insurance would cover them for bankruptcy and insolvency of the travel agent. Considering only one policy appears to offer such coverage, it is likely that consumers are mistaken.
  • Consumers are exposed to financial loss as not all agents, including ATAS agents, offer adequate protection for clients against their default. The extent of this risk to consumers is not well known due to lack of data.
You can download the CHOICE submission at choice.com.au/atas
Written by Peter Needham



Currently there is "1 comment" on this Article:

  1. Andris says:

    Unbelievable , Choice back tracking with a half pregant admission that the current arrangements are a DEAD DOG carcass masquerading as consumer protection

    I call on Choice to re write its submission ,which attempts to try to make the new arrangements acceptable and avoids calling a dead dog a dead dog and fails to require that consumer protection principles be the basis of the policy , including the immediate re in statement of the TCF . Currently Choice has compromised itself by taking funds from the TCF kitty . Choices selling point has always been it is fiercely independent and never accepts outside funding

    Choice and every professional independent consumer protection worker should reflect on a little history about the market place

    Voluntary schemes providing financial compensation to consumers by insurers or industry have always collapsed , often due to financial insolvency

    Commercial interests are well aware that voluntary schemes are a difficult proposition and inevitable fail . Mandatory schemes are preferred . Generally the preference is based on the industry’s ability to rort it or some favored participants can milk it for financial benefit . The only beneficiaries of the TCF were consumers . That characteristic , that benefits were confined to consumers only is the reason the TCF needed reform so it had to go . And so it went with government complicity because the relevant policy makers skill sets were in appropriate to assess the issues and develop evidenced based policy recommendations

    The other preferred model is delay , industry guidelines ,accreditation all mickey mouse motherhood issues that seek to avoid addressing consumer concerns and certainly avoid paying compensation . The history of the Financial Ombudsman Services is a case in point .

    The FOS began with the Australian Bankers Association and Insurance Council of Australia , introducing voluntary guidelines which progressed to industry funded Ombudsmen who could eventually order and enforce compensation payments to the FOS of today as a industry regulator on behalf of consumers , with enforceable orders for compensation

    The TCF is a variation of the FOS model that many in the commercial world would find repugnant. And so was the case with the TCF

    I call on Choice to stop playing games trying to fix a broken system and publicly state that the TCF should be immediately re instated

    After all nobody to my knowledge has had the temerity to claim the TCF arrangements were broken ,not deliverying to consumers and failing financially

    So why fix something that was not broken RE IN STATE the TCF , the current arrangements are clearly a failure

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