Opinion: After Goldtrail, regulators should focus on sales documentation

Were agents looking closely enough at paperwork from Goldtrail? And do regulators need to be more hands on? By Whitehart Associates senior partner Chris Photi

Chris PhotiA large travel company failure is always a time when the industry and regulators can take stock and learn lessons. 

The failures of Freedom Direct and the XL Group flushed out a lot of issues, but there is still much to learn from the failure of Goldtrail. 

I have been concerned about the quality of sales documentation issued by the industry for some time now. 

The major issue that has come out of Goldtrail relates to ATOL to ATOL (“A2A”) sales invoices being issued to a number of agents instead of the “usual” Atol Confirmation Invoice, despite these containing their Abta retail number as reference and detailing self-billed agents’ commission. 

In relation to consumer claims the CAA is likely to assert that as Goldtrail has not issued an Atol Confirmation Invoice the consumer is unable to make a claim against the Air Travel Trust Fund. 

This being the case, the consumer could therefore look to the travel agent with whom it booked its arrangements to reimburse, or alternatively, could revert to its credit card company for a refund. 

The knock-on effect of the charge backs will be that the travel agent could be held responsible for such funds. 

The simple fact is that the travel agent accepted invoices from Goldtrail that were A2A. What each agent should have done was ensure that it had a formal agency agreement with Goldtrail. 

Too often companies will source supply from a tour operator without having in place a formal agency agreement. Some simple trading terms are not enough.

When these agents noticed the A2A invoicing they should have addressed the issue with Goldtrail immediately or put Goldtrail on “stop sell” which would have made them change the position post haste.

What of the agent’s own sales documentation to the consumer?

For a Goldtrail package or flight the agent should have been issuing an ATOL receipt clearly identifying Goldtrail as the principal in the transaction, and should also have been sending on a customer copy of the Goldtrail ATOL confirmation invoice.

It is my understanding that Goldtrail confusingly issued a customer copy of the A2A seat sale invoice, not an ATOL confirmation invoice.

Technically, therefore, the question is did the consumer have a contract with Goldtrail? The CAA says no, Abta says yes. What a mess.

Clearly none of this is good for the image of the industry, nor is it a desirable situation for the government regulator. Some form of compromise needs to be reached and lessons need to be learned.

The lesson is to ensure that the documentation issued by the various parties to any transaction is in accordance with the relevant regulations. 

Abta’s guidance on this is excellent but their members are obviously not applying it. The CAA only reviews customer documentation once a year at renewal time.

I suggest, therefore, that the CAA and Abta should take a more hands-on and regular approach to reviewing the documentation issued by travel companies, particularly where concerns have been raised, rather than regulating from afar.

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