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States hustle TCF towards door but big worries persist  

May 9, 2014 Corporate, Headline News No Comments Email Email

egtmedia59Western Australia has introduced legislation in State Parliament to deregulate the Western Australian travel industry and abolish the Travel Compensation Fund (TCF). Similar legislation is planned, or proceeding, in other states.

WA Commerce Minister Michael Mischin said while WA did not originally support total deregulation, the Government was left with little choice but to align with other States.

The WA Government never favoured cancelling state licensing or abolishing the TCF. It even investigated maintaining some form of state regulation to continue providing consumer protection. After extensive consultation with the WA travel industry, however, the WA Government reluctantly concluded that WA simply doesn’t possess the critical mass to fund a TCF-type operation in isolation from the other states.250x250

“We looked at this issue very carefully and came to the conclusion that WA could not go it alone and retain a state-based licensing system and compensation fund, as this would put travel agents here at a distinct disadvantage when competing with interstate and overseas agents,” Mischin explained.

“It was clear after consultation with local agents that the most viable option available to WA was to join other States in ending the licensing system, particularly considering the cross-border nature of the industry.

“The Australian Consumer Law will continue to underpin the rights of consumers who transact with travel agents and the development of an industry-led accreditation scheme will seek to promote and maintain professional industry standards.

“I acknowledge there are valid reasons for changing the current system. There has been a large increase in online travel bookings and the relative cost of travel has become cheaper in recent years.  The industry successfully argued that regulation costs made Australian agents less competitive in today’s international travel market given the accessibility that the internet provides.”

The national target date for states to repeal their licensing laws is 1 July 2014, which is also the date the TCF will stop accepting new participants into the fund.  The TCF will, however, continue to accept eligible claims that may arise for bookings made before 1 July 2014 until its eventual phasing out by late next year.

“Funds from the disbanded TCF will be provided to CHOICE to conduct research to identify and track emerging travel issues and consumer needs and to finance a national community education campaign,” Mischin said.

“Support is also being given to the Australian Federation of Travel Agents to assist in the development of a voluntary accreditation scheme and an industry Code of Conduct, which will include complaint handling processes and set standards of good industry practice.”

Although the WA Government’s media statement comments that “The Australian Consumer Law (ACL)will continue to underpin the rights of consumers”, that may be  challenging when it comes to travel. Travel is an intangible product and, unlike with most other consumer goods, there is no physical delivery at time of  purchase. The product is often paid for far in advance. Consequently, ACL does not offer effective protection against a travel agent failing to properly account to suppliers for monies received from customers.

Over the most recent six-year reporting period (2007-12) the TCF paid consumers in excess of $17 million for claims resulting from travel agent failures. The TCF processed 145 claims involving 393 claimants in 2013 as a result of 10 travel agent collapses. The total consumer compensation paid in 2013 was $2.4 million. Already in 2014, four agents with a total of 13 outlets in five states have collapsed. The most recent of these occurred last week, with initial reports indicating total claims will be in the vicinity of $250,000.

Written by : Peter Needham

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