Michael Budge, head of Atol at the CAA, again insisted that “no decisions have been made” on how it plans to reform the Atol scheme, during a presentation at Abta’s Travel Law Seminar in London on Thursday (11 May).
He added the CAA was still “reviewing responses” from the industry about how consumer financial protection for flight-inclusive package holidays will be changed before publishing its final proposals.
“The regulator is not looking to prevent failures,” said Budge. “If you tried to set that as an objective, it would be a fool’s errand. There are insolvencies – they happen all the time.”
Budge said the CAA was still looking at commencing the new Atol arrangements from April 2024. But he insisted this was “not a cut-off date” for full implementation and those due to renew their licences in March next year would still do so under the existing regime.
“The renewals in March 2024 will be based on the current framework,” he added. “I anticipate in September 2024 that will still be the case with the option of doing it under one or the other. There will be a time to transition to whatever these new arrangements are.”
He admitted there was “still significant diversity of opinion across the industry” about how Atol should be reformed, particularly around the issue of the segregation of consumer money before they travel.
“Segregation does not necessarily mean a trust account,” added Budge. “It does not necessarily mean complexity and cost, and does not necessarily mean not paying suppliers in advance.”
Budge added that segregation could potentially be as simple as travel companies using “two bank accounts” to separate consumer money and other funds without the need for trustees.
“We don’t want an army of people running around doing this,” he said. “We don’t want to create a significant extra burden. It’s about making sure these businesses are operating as a going concern.”
Matt Gatenby, senior partner at Travlaw, predicted the April 2024 start date for the new reforms was “not going to happen”.
“Things might start moving after April – there’s no reason why some changes could not be brought in by then,” he said.
Gatenby added that the introduction of a variable form of APC (Atol protection contribution) was a “no brainer”. APC is currently set at the flat rate of £2.50 per passenger.
“But will it be varied on price or perception of the stability of the company?” asked Gatenby. “I feel some form of segregation is a fair prediction to make but it will be at the lower end of predictions as opposed to total segregation.”
