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'Scrap refund credit notes', says On the Beach
On the Beach chief executive Simon Cooper has called for so-called "refund credit notes" (RCNs) to be scrapped and for consumers with outstanding credit notes to be given cash refunds.
Cooper’s comments come after the CAA last week confirmed it was in talks with the government over extending the deadline for issuing new RCNs beyond 31 March, and their expiry date.
RCNs were introduced last year as a contingency measure, allowing firms to effectively defer cash refunds as pipeline monies fail to flow quickly back down to travel sellers and onwards to consumers.
It was feared that without widespread adoption of RCNs, many more travel firms would have been placed under financial pressures likely to have resulted in their failure owing to the statutory requirement under package travel rules to refund customers within 14 days.
On the Beach on Monday (22 March) called for the CAA to take steps to reassure holidaymakers they can book with confidence and that the challenges dating to the early stages of the Covid crisis had been addressed.
CAA chair Stephen Hillier recently addressed the UK Aviation Club, stressing consumers would be at the forefront of a consultation on the future of the Atol scheme. He added lessons had been learned from the crisis.
Said Cooper: "Extending the refund credit note deadline only kicks the can down the road. From travel companies increasing their prices to rebook the same holiday and leaving consumers with no option to shop around, to lack of clarity on the terms and conditions, and the likelihood of some people forgetting to redeem them altogether, these vouchers are not in the best interests of consumers."
On the Beach is among a growing number of travel firms that hold customer monies in a trust account which cannot be accessed until they have travelled, meaning the money can’t be used as working capital. The OTA claims the arrangement allows it to pay refunds for cancellations more promptly.
"It’s not fair that consumers have their money locked up in these vouchers," said Cooper. "Travel companies are using the money their customers have paid for future holidays as cash flow.
"Should any of these companies enter financial difficulty, it would take many months and administrative burden for consumers to get their money back from Atol."
He added the industry must better communicate the value and importance of financial protection to customers.
"More needs to be done to improve consumer awareness of their right to a cash refund and it’s in the the public interest for the CAA to report on the volume of vouchers in the market right now.
"There needs to be a change in regulation to protect customer monies, following our model of using trust accounts to ring-fence our customers’ money until they travel."
