Aito has warned the Financial Conduct Authority (FCA) that it is “misleading” consumers about their legal rights to cancel holidays and reclaim cancellation fees from their travel insurance if Foreign Office (FCO) advice changes.
The specialist travel association said the FCA was failing to tell holidaymakers who book a package with a tour operator that they have the right to cancel “at any time”. Although they will incur a cancellation fee from the operator if they do so.
Aito said most consumers could then claim for the cancellation fee through their travel insurance if the FCO advised against all non-essential travel to their destination, provided this is covered in their policy.
Aito chair Chris Rowles said: "We seek urgent amendments to the FCA’s currently incorrect advice - on its website and as explained to helpline callers. The rules are complex, but government bodies such as the FCA simply have to get things right.
“With FCO travel advice changing frequently and without warning, as we have just seen for Spain, the regulators must take care to communicate clearly to consumers how they are affected and the steps that they can take."
Aito called for the FCA to make sure these rights are clearly “spelled out” to consumers in the current climate with FCO changing to major destinations at short or no notice.
Aito director Noel Josephides added: “The recent FCO advice on the Canaries and the Balearics is a case in point, bearing in mind that that FCO advice carries no regulatory force and does not oblige organisers to cancel.
“Although the FCO advice triggers travel insurance cover, it does not prevent the travel services in the package from being delivered. Certainly the traveller cannot cancel without paying a cancellation fee, because the operator can deliver the package booked.
“Equally, the client would not be able to claim a full refund from the operator. Customers would, however, be able to claim on their insurance if it included cover for cancellation on FCO advice. The FCA needs to spell that out.”