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Why not use TCF $27 million to limit consumer losses?

May 12, 2014 Corporate, Headline News 3 Comments Email Email

egtmedia59The Travel Compensation Fund is holding AUD 27 million in reserves after payment of AUD 2,799,592 to AFTA to establish and promote ATAS as part of Travel Industry Transition Plan (TITP).

The AUD 27 million figure (AUD 27,071,647, to be precise) derives from agent contributions and the figure is revealed in the newly published Travel Compensation Fund (TCF) report for 2013. The TITP was approved by the COAG Legislative and Governance Forum on Consumer Affairs.

It’s anticipated that State Governments will take possession of any residual from this AUD 27 million of TCF reserve as general revenue when the Web-banner-300-250scheme finally closes down on 30 June 2015.

It’s a lot of money. Considering that these funds have been contributed by travel agencies to protect consumers against loss and disruption, a few agents are wondering if something useful could be done with it.

Given that this was originally TCF members’ money, one idea would be to use it in some way over an interim period to limit consumer losses until flaws in the AFTA Travel Accreditation Scheme (ATAS), as it’s currently proposed, are rectified.

ATAS, which is voluntary, is the only form of oversight for travel agents from 1 July 2014. Unlike the TCF, ATAS does not guarantee consumer protection but offers three types of optional insolvency insurance, the most important of which (from a travel agent’s perspective) is ATAS Participant Insolvency Insurance (APII). It is intended to provide similar consumer protection to that presently provided by the TCF.

Up till now, however, no details of the cover or premiums for APII have been made available to the industry. That’s despite government signing off on the Travel Industry Transition Plan in December 2012 and with ATAS only seven weeks away from becoming operational.

The TCF in 2013 processed 145 claims involving 393 claimants as a result of 10 travel agent collapses. The total consumer compensation paid in 2013 was AUD 2.4 million. The total compensation paid out to consumers by the TCF since its inception in 1987 stands at AUD 62.8 million, an average of AUD 2.4 million each year.

Written by : Peter Needham

Currently there are "3 comments" on this Article:

  1. Sue Natho says:

    I have an even better idea! Why not give it back to the travel agents who made these contributions in the first place, particularly our initial payment of approx $10,000 to become a TCF participant which was mandatory to obtain our travel agents licence? These funds do not belong in state coffers! According to AFTA under the TCF trust deed all surplus funds after the closure of TCF must be distributed pro rata to the relevant States and yet they have been able access almost $3 million for themselves. I thought AFTA was supposed to look after the interests of travel agents!

  2. I think we need to reconsider bringing back TCF ASAP and I already feel a letter to my local minister coming on if travel agents do not have all the information they need from AFTA by the end of this week.
    I have received preliminary quotes for SAFI & EFSI and expected TAIFI (this is the new name for APII) to be released last Friday but I’ve not seen anything by email or on AFTA website yet. My SAFI quote was between $3-$5 for every ticket, potentially $6,000 pa for me and ESFI was between approx $23,000 and $50,000. As you can image both of these are out of the question for small business which I expect makes up most of the industry. I also spoke to another Insurer and was told getting insolvency cover is nigh on impossible hence the huge premiums and now the clincher will be the one we have been waiting for: TAIFI.
    I have already had signs from two sources that indicate it is going to be more expensive than the TCF Annual fee of $375 and a usual audit costs of between $3,000 and $5,000 pa. In which case I will be livid.
    The only real holes in TCF were credit card reversals for supplier failure, the inconvenience of getting an audit completed annually because that this was too expensive and onerous especially for the big end of town. Considering the delays since Dec12, the incomplete and complicated application process, the likelihood that costs for small business will be exorbitant and result in less industry protection for consumers this endeavour seems to have been a complete waste of time. To embark on this by terminating a completely suitable and cost effective system in favour of one with no costs, guidelines or knowledge of outcomes seems incompetent to me and something I would never do when making a major family or business decision. It feels like someone elses midlife crises has been imposed on small business travel agents.
    Therefore, by the end of this week if the ‘project’ is still in a shambles, incomplete or too expensive for the thousands of small business operators, I will be again writing to AFTA and my local minister as I did at the beginning of this process, to know express my strong desire for this futile endeavour to be scrapped and TCF be reinstated along with $27M of travel agent funds before it gets forever lost in State coffers.

  3. AgentGerko says:

    Good call Narelle. The TCF could easily have been tweeked a little to cover a few loopholes and was working well and comfortably in surplus. Now we’ll have to cope with an expensive and complicated process. I’ve been recently trying to complete the insurance quote form which asks ridiculous questions like “what is the most somebody will spend on a holiday with you next year”. Someone give me a crystal ball, will you? Give AFTA a match and watch them start a bushfire. This is what happens when you get a supposedly industry body whose board is totaly comprised on CEO’s from publicly listed companies whose loyalty is to shareholders and not their members.

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