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Seventh Agency Collapse – How Many More Before Government Takes Action To Protect Consumers?

November 13, 2015 Mobile travel consulting No Comments Print Print Email Email

With the announcement this week that Parramatta based Value World Travel in New South Wales has collapsed with “hundreds of travellers being left $3 million out of pocket and others stranded” as reported in Wednesday’s issue of news.com.au, the question must be asked how many more agency collapses will it take for Government to take action.

Since the disestablishment of the Travel Compensation Fund (TCF), Value World Travel makes seven travel agencies being reported to have collapsed since 5th May 2015 with consumer losses as a direct result of these collapses to date, estimated to have reached in excess of $4.5 million.

“If nothing else, these losses alone prove consumer protection against fraudulent actions of their travel agency is clearly no longer existent,” says TravelManagers’ Chairman Barry Mayo.http://www.tourismlegal.com.au/

Mayo strongly believes it is the state governments that 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 that consumer losses now being experienced is as 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. 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 is important to remind the travel agency community that $25 million dollars of TCF funds contributed by travel agents remains intact.

“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 recognizes that these travel agencies may have also have failed under the TCF. However, their customers would not have been out-of-pocket.

“We recognize 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) were fearful of 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 also echoed by submissions from CHOICE 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 thirty 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 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,” reflects Mayo.

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