Funds left sitting in the Travel Compensation Fund (currently totalling about AUD 25 million, most of it destined to disappear into state consolidated revenue) should instead be used to re-establish the TCF, with a meaningful membership criteria.
That’s one of several suggestions by TravelManagers’ chairman Barry Mayo in the wake of the collapse of two ATAS-accredited travel agents in recent weeks. Mayo has called for a “serious review” of ATAS and the rejection of its current form.
He said a TCF revival would provide the community with effective consumer compensation in the event of travel agency failures and in doing so, would enhance the reputation of the travel industry.
Travel Rockhampton, an ATAS-accredited Helloworld associate agency, ceased trading on 5 May 2015, a day before Victorian-based CTS Travel Services abruptly shut down and took clients’ money with it.
Travel Rockhampton was a helloworld associate member, so consumers were protected by helloworld’s Customer Protection plan.
CTS Travel Services clients were not so lucky. AFTA has asked the police, Consumer Affairs Victoria and the Australian Securities and Investments Commission to investigate the firm, its management and the circumstances surrounding the demise of the business, the Herald-Sun has reported. CTS Travel is said to owe more than AUD 340,000 to at least 70 creditors.
AFTA is reported to be commencing a review with the objective of beefing up its ATAS accreditation scheme following the crashes.
Reliable industry sources say there have been about 25 agency collapses since 30 June 2014, when the ATAS accreditation program began.
While two of the agents involved have been ATAS-accredited, Mayo says that the financial collapse of any agent, non-accredited or ATAS-accredited, “is a black mark against every travel agent as there is a very real danger we will all be tarred with the same brush and consumers will choose to deal direct with airlines, cruise companies and tour operators in place of a travel agent.”
Mayo said that the media revelation that CTS Travel was ATAS accredited meant it was time for a serious review of the situation.
“TravelManagers is of the view that individual members of the industry need to publicly acknowledge that an accreditation scheme without consumer compensation is worthless from both consumer and industry perspectives,” he said.
“We believe it’s time to reject ATAS in its current form as it misleads consumers and serves no meaningful purpose other than to deliver revenue to AFTA and justify a burgeoning bureaucracy.”
The situation facing CTS Travel’s customers was precisely what TravelManagers had feared, Mayo said.
“We view this situation is a direct result of 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 in response to AFTA lobbying.”
Mayo conceded that it was possible CTS Travel Services would have failed under the TCF, “but most importantly its customers would not have been out-of-pocket, the travel agent community’s integrity would not be under threat and it would have been subject to more rigorous financial oversight resulting in some form of bank guarantee or insurance bond to help preserve TCF members’ funds used to cover consumer losses.
“This in turn would have negated negative media coverage of the travel agent industry which affects each and every travel agency owner in Australia.”
In a hard-hitting statement, Mayo accused AFTA of seemingly having lost touch with its grassroots membership by having lobbied government to abolish the TCF without a meaningful replacement.
“AFTA management appears to have tacitly approved for TCF members’ funds to be distributed to government as general revenue calculated on a pro rata basis by the number of TCF members in each state as the price for deregulation.
“In our view the state governments are actually guilty of disbanding the TCF without ensuring that ATAS offered something worthwhile to the travelling public. The electorates deserve to be treated better.”
It was recognition of ATAS shortcomings that led TravelManagers to collaborate with Gow Gates Insurance Brokers over several months to develop its own Trust Account Fidelity Risk Insurance, Mayo added.
Written by Peter Needham