Could consumer protection waters be any muddier?

The confused state of consumer financial protection is a running sore in the trade. But how much of it is self inflicted?


Sure, online retailing has rendered the Package Travel Regulations – incorporated in the ATOL Regulations – largely obsolete, the government passed up the chance to make ATOL protection universal, and the Court of Appeal failed to clarify the law in every instance. A sufficient grey area remains for lawyers to give conflicting advice, which is why Travel Republic faces summary trial in October following action by the Civil Aviation Authority.


The situation was straightforward in the bygone days of agents selling package holidays and seat-only flights. ABTA’s recent guidance on booking with bed banks indicates how things have changed. A bed bank “may act as a principal to the consumer, agent of the accommodation owner or supplier to you, and may have arranged financial protection or not”. Agents need to understand the difference.


I sympathise if your eyes have glazed over, but that is part of the problem. A bed bank acting as a principal poses no difficulty. If they act as an agent, that needs to be crystal clear to you and your client – and a claim if things go wrong may be against the accommodation owner in the destination. That is something the Package Travel Regulations were specifically designed to prevent and thus a problem in itself.


If the bed bank acts as a supplier to you, basically “you must accept liability for all of the services” – and if you are an ABTA member the association had better know.


How many bed banks act in these various ways? ABTA was unable to tell me even roughly what proportion of bed banks act as principals, agents of accommodation owners or suppliers.


Do ABTA-member travel agents understand the difference and act accordingly? Some of the recent failures suggest not. ABTA head of legal services Simon Bunce concedes: “There is a real lack of awareness of where the liabilities are.”


The people at ABTA are charming, knowledgeable, hardworking and helpful. The law is an ass. But surely it is time to get a grip on the situation.

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