CAA consults industry on lessons of XL failure

The Civil Aviation Authority has launched a three-month consultation on its handling of consumer claims following travel company failures.

The consultation comes after criticism of the CAA for taking up to a year to process claims in the wake of the collapse of XL Leisure Group in September 2008, and for confusion over whether credit card companies or the CAA would handle pay outs.

The collapse of XL, at the time the third largest Atol company, was complicated by the complex way it distributed both traditional packages and components of dynamic packaging through subsidiaries such as seat-only Freedom Flights.

The CAA is seeking comments on its management of XL claims, its information to claimants and how it should plan for future failures.

However, it also wants views on how to tighten travel trade practices, given the failure of many travel agents to provide XL customers with ATOL receipts was a key cause of the delay in processing claims.

The consultation document states: “A large proportion of travel agents acting on behalf of [XL subsidiary] Freedom Flights did not issue ATOL receipts in the manner prescribed by the ATOL Regulations when accepting payments from customers.”

The CAA consumer protection group will meet travel association ABTA to discuss ways to tighten agents’ documentation of sales.

It said discussions with credit card issuers had clarified responsibility for refunds where consumers pay for only part of a holiday by credit card.

The consultation will be overseen by former UK chief financial ombudsman Walter Merrick, who noted the claims process remains “very paper based, very dated”.

He said: “The CAA board wants external validation that as much has been done as can reasonably be expected and that there is the right balance.”

The consultation document is available to ownload as a pdf.

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