CHOICE says moves to abolish a long-standing protection scheme for travel consumers, the Travel Compensation Fund (TCF), would leave many Australians high and dry when travel agents go bust.
CHOICE is calling on Consumer Affairs Ministers from around Australia to reject the proposals in the Draft Travel Industry Transition Plan when they meet on 7 December.1
“Just yesterday, more than 5,000 passengers booked on cancelled ‘Athena cruises’ were told to contact the Travel Compensation Fund, with most believed to have paid 40% deposits,”2 says CHOICE head of campaigns, Matt Levey.
“If the Fund is abolished, Consumer Affairs Ministers need to explain where they will direct people next time a travel company fails, recognising that one-third of travel expenditure is still done through agents, often for very expensive holidays,” says Mr Levey.
CHOICE has released a submission on the Draft Plan, arguing that the proposed changes fall well short of Ministers’ public commitment to “enhanced consumer protection”3 and are likely to leave travellers out of pocket.
The Draft Plan proposes that following the abolition of the TCF, consumers would rely on the ‘chargeback’ protections available with some credit cards, along with an industry accreditation scheme and travel insurance, arrangements which CHOICE, along with other consumer groups and parts of industry, believes are inadequate.4
“Chargeback is a piecemeal replacement for a compensation scheme because not everyone pays by credit card, and moreover, it’s wrong for governments to promote high-cost debt payments as a form of mainstream consumer protection,” says Mr Levey.
“Existing travel insurance products don’t cover the insolvency of travel agents, and there are doubts about whether such products would materialise if the compensation scheme was abolished.”
“Simply establishing an industry accreditation scheme, with no compensation fund, no prudential oversight and no consumer involvement, will do nothing to enhance consumer protection,” says Mr Levey.
CHOICE says that if Ministers decide to abolish the TCF and reform it to make funds available they should provide funds to establish a national Travel Consumer Advocacy Centre. This would ensure ongoing assistance, unbiased information and advocacy for consumers.
“Experience shows that industry-run schemes work best with participation from well-resourced consumer voices, and if the fund is wound up, a portion of its reserves must go towards enhanced consumer involvement and advocacy,” says Mr Levey.
CHOICE’s submission to the Draft Travel Industry Transition Plan is available online.