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The sun sets on Travel Agents Licensing in Australia on 30 June 2014

November 21, 2013 Headline News, Travel Law No Comments Email Email

egtmedia59The NSW Minister for Fair Trading and the Victorian Minister for Consumer Affairs are proceeding with the Travel Industry Transition Plan which was approved on 7 December 2012 to abolish travel agents licensing as of 30 June 2014.

The Travel Agents Repeal Bills were introduced into parliament on 13 November 2013 (Victoria) and on 14 November 2013 (NSW). The other states and territories are in to process of repealing their Travel Agents Acts.

And so the sun will set upon travel agents licencing in Australia as of 30 June 2014, and on the Travel Compensation Fund by 31 December 2015.Cordato Partners-www.tourismlegal.com.au

Will travel agents licensing be missed?

Travel Agents licensing began in Australia in 1973, in NSW, after a spate of travel agency collapses which left travel consumers stranded for travel arrangements they had paid for. A Travel Agents Act was introduced which required travel agents to deposit all money received into a trust account, with strict rules on payments out of the trust account.

In 1986 and 1987, travel agents licensing spread around Australia (except for the Northern Territory). Each State decided it needed its own Travel Agents Act. Instead of requiring travel agents to have a trust account, the States introduced an Australia wide body, the Travel Compensation Fund, which effectively insures consumers against a travel agents default in passing on money it has received to suppliers. Membership of the TCF is compulsory as a condition of holding a Travel Agents Licence. It’s fair to say that the TCF imposes ‘a red tape burden’ – a substantial cost and administrative burden on the 99% of travel agents who look after their client’s money properly.

In introducing the repeal, the NSW Minister said this about the abolition of the TCF:

“Given that payments are now frequently made directly to travel providers and/or by credit card, the Travel Compensation Fund and licensing has become increasingly redundant. The regulatory scheme has placed a costly administrative burden on the industry.”

‘Increasingly redundant’ is an apt description. These days, money paid to a travel agent hardly has time to clear before it must be paid to suppliers – the IATA BSP being a prime example.

Strangely enough, the Travel Agents Acts never contained any other consumer protection. The Acts did not contain warranties of due skill and care in making travel arrangements, prohibitions on misleading and deceptive advertising, transparent pricing, allowable deductions from refunds and so forth. These were left to State Fair Trading and Consumer Protection laws.

As the NSW Minister said about the abolition of travel agents licensing:

“The internet and e-commerce have transformed the way consumers purchase flights, hotels, tours and other travel related products. The 1986 Travel Agents Act is based on an outdated concept of how this industry operates. The Australian Consumer Law, which commenced on 1 January 2011, has much more relevance to consumer travel purchases both now and into the future.”

‘Outdated concept’ is also an apt description. Despite the best efforts of the TCF to expand its reach beyond the core travel agents and tour operators, to wholesalers and others, it has failed to reach across the travel industry, particularly the suppliers, in any meaningful way. A good example was the collapse of Air Australia in February 2012, where no TCF coverage was available to stranded passengers.

Travel industry – welcome to freedom! No more government licensing or insurance.

As the NSW Minister said in conclusion:

“The well-considered transition plan replaces largely redundant institutions and approaches in favour of market-based mechanisms capable of accommodating all parties’ needs for future travel transactions.”

Note that the ACCC has issued The Australian Consumer Law Guide for the travel and accommodation industry in August 2013, which covers the consumer protection issues. Click here for an outline.

Written by : Tony Cordato

Related stories:

The new Australian Consumer Law Guide for the Travel and Accommodation Industry

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