Full details have been released of the end of the Travel Compensation Fund (TCF) and the disposal of AUD 19.5 million in residual TCF funds, contributed by the travel agency industry.
TCF funds built up over the years. Some of the money was used to compensate consumers when travel agents went bad or failed. That helped to ensure consumers didn’t lose their holidays and their money, thus avoiding all the bad publicity such collapses generate.
The final TCF report mentions that AUD 2.15 million of TCF funds have been paid to AFTA and AUD 2.8 million to CHOICE to enable them to inform their respective constituencies about the closure of the TCF and the creation of ATAS.
That left a total of AUD 19.48 million in residual TCF funds.
There were strong arguments about what should happen to that money. Some in the industry suggested the revenue should be used as seed money to establish an alternative protection program for Australian travel consumers. That would have placed Australian travel consumers on a similar footing to their counterparts in Britain, Ireland and New Zealand.
AFTA lobbied for at least some of the AUD 19.48 million to be used to extend the education process to consumers, to make them more aware of the ATAS scheme.
In the end, however, neither of those arguments prevailed.
The money – AUD 19,479,873, to be precise, paid in by hard-working travel agents – has been paid out to State Governments, who are under no obligation to use it for anything travel related. The cash will most likely disappear into consolidated revenue, never to be seen again.
The TCF’s final report states: “Pursuant to a Ministerial Council direction in 2014, $2,130,378 has been paid from TCF funds to the Australian Federation of Travel Agents for the National Travel Reforms Campaign and $1,043,733 for Choice Funding Feed and in 2015, $26,681 for the National Travel Reforms Campaign and $1,755,696 for Choice Funding Feed.
“Pursuant to the Trust Deed, upon termination of the Trust, any money standing to the credit of the Fund is to be paid to the States in proportions equivalent to the total number of participants in each State as at 30 June 2014. In 2015, $19,479,873 was paid out to the States.”
A heading in the report “Legal actions and financial recoveries” includes an intriguing reference to “negligent auditors or negligent/fraudulent persons”.
It reads: “The last remaining litigation matters have resolved, with the last matter finalised and paid in August 2016. The outstanding litigation matters were recovery actions against negligent auditors or negligent/fraudulent persons and all were satisfactory resolved, including one for a large six-figure sum.
“No new litigation matters were instituted in the last 12 months by the TCF and none are outstanding.
“Unsuccessful claimants had the right to lodge an appeal to the relevant state administrative Tribunal or court and a few did so in the last 12 months. However, those matters, all of which were lodged with the NCAT, have resolved and no new appeals can now be lodged. A few employment and other matters were on foot during the course of the year and the Board resolved them before the closure of the TCF.”
Some TCF pay-outs were made after the cut-off period that was originally envisaged. As the final TCF report puts it:
“A gradual wind down of claims management then took place up until 1 July 2015, the cessation date of the 12 month grace period for consumers to lodge claims about losses prior to 1 July 2014.
“Subsequently it was found that wording on the claim form could have been misinterpreted by consumers to suggest that claims could be made up to 31 December 2015. Seven claims fell into this category. If the consumer relied on the unclear information on the form, and lodged a valid claim then their claim was paid.”
The report also noted that “payments of $2.13m in 2014 and $26,681 in 2015 to the Australian Federation of Travel Agents (AFTA) and $1.04m in 2014 and $1.75m in 2015 to CHOICE to inform their respective constituencies about the changes to the TCF and the creation of a new travel industry agent accreditation mechanism.”
TCF independent chairperson Fiona McLeod said the TCF had “for nearly 30 years been an important consumer protection mechanism and many fine people have served as Trustees of the Fund over that time”.
The final TCF report for the period 1 January through to 31 August 2016 has been posted on NSW Fair Trading’s website and can be downloaded as a PDF file here: http://fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Publications/Annual_reports/Travel_Compensation_Fund_Final_Report._1_January_2015_31_August_2016.pdf
Written by Peter Needham