Unknown future for Travel Compensation Fund

The recent meeting of Ministers for Consumer Affairs decided there will be consultation with stakeholders between now and December 2012 on a “Transition Plan” which could involve major changes to or even the scrapping of the Travel CompensationFund (TCF). The TCF compensates consumers who suffer loss when a travel agent collapses.

This decision follows a campaign by several members of CFA for consultation on the issue. Consultation was promised in mid 2011 but has never happened. CFA supported the member campaign by sending a letter to every Minister for Consumer Affairs urging that there be consultation before any final decisions on the future of the TCF.

Consumer groups do not agree with all of the conclusions in the Communique issued by Ministers following their July 6 meeting. Any “Transition Plan” should not result in reduced consumer travel industry protection and should also consider problems across the travel industry not just in relation to travel agents.

The Communique said:

“Ministers present at the Meeting of Ministers for Consumer Affairs acknowledged the Travel Compensation Fund (TCF) had played an important role in protecting consumers in the past. However, Ministers agreed that the TCF could not continue to be the primary vehicle for consumer protection in the travel market. There have been both fundamental changes in the market and recent legislative arrangements entered into between the States, Territories and Commonwealth, in particular the strengthened legislative protections under the Australian Consumer Law (ACL).

Ministers also noted that the current arrangements are not satisfactory. In particular, only about a third of affected consumers have any redress under the scheme and more money is being spent on the administration of the scheme than is being paid out to consumers. There has been extensive consultation about the role of the TCF over the last 4 years following concerns about coverage of the market and the relevance of the TCF for consumer protection. A range of options has been identified but there has been a general acceptance that the current system is a significant regulatory burden with declining benefit. Ministers also note that the larger jurisdictions signalled that in the absence of an agreed transition plan, they would withdraw from the TCF. This may mean that the TCF may no longer be viable.

Ministers have received from officials a draft plan of transition from the existing arrangements to ensure that consumers continue to be protected in the travel market. Ministers intend to release a draft transition plan and invite comments and suggestions from interested parties. Ministers committed to consultation with all interested parties, including industry and consumer groups during the development of the final transition plan. Ministers agreed to receive a final transition plan with the intention that the plan be determined at the December meeting of Consumer Affairs Ministers in Sydney in December 2012.”

Ian Jarratt

Queensland Consumers Association