Trend on travel

A guarded welcome to new holiday p protection laws

Nick Trend

This week a press release issued by Number 10 announced new protection laws for holidaymakers.

It quoted the Prime Minister’s approval of what was to be the first Bill to be debated in the House of Commons since the election.

“This Government is committed to making our country fairer by ensuring consumers have the protections they deserve both online and offline,” she said. “Whether you book a getaway on the internet or the high street should not make a difference to knowing you won’t be stranded or left out of pocket if something goes wrong.”

The proposed new laws are not really a Government initiative. It is simply implementing the latest directive from Brussels, which it is legally bound to do since we are – for the time being – still members of the European Union.

So, now we’ve got that straight, and assuming the proposed legislation is duly passed by Parliament (and also not repealed when we leave), what will the new protections mean for holidaymakers?

The concern for consumers has always been that you have to pay for your holiday in advance. If the travel company goes out of business before you leave you might lose your money. If it happens while you are away, you could be stranded and have to pay to get home. Under the current Government ATOL scheme (caa.co.uk/ atol-protection) – which requires every UK travel company selling holidays and flights as a package to hold a licence – most people are already protected and will be refunded or repatriated in the event of an insolvency. But the key problem with current arrangements – which date back to 1992 and also stem from a European Directive – is that they were designed before the days of online booking. They have been adapted over the years, but they still leave gaps – especially for those booking flights and accommodation separately.

So, following EU requirements, the new legislation will extend ATOL protection to consumers who book flights, hotels or car hire that are not sold together as a package holiday. So, for example, if you book a flight online and are then directed by the airline to a separate company to book accommodation within 24 hours, that holiday (comprising both the flight and the hotel) will have to be covered under the ATOL bonding scheme.

That’s all good news, but it still leaves some important loopholes. For example, websites and companies which are based outside the UK aren’t subject to our laws, so can’t be forced to comply. In theory, that shouldn’t be a problem if the company is in another EU country because Brussels directives must be applied by all member states. But last year the collapse of the Lowcostholidays group demonstrated that this doesn’t always work in practice. The company was based in Majorca, and the protection scheme there did not have sufficient funds to reimburse its customers. Thousands of UK holidaymakers lost their money and their holidays.

But amid all this uncertainty there are two things you can do to be sure that your money is protected when you book travel arrangements. First make sure your booking is covered by an ATOL certificate. If that isn’t the case – and it often won’t be – book using a credit card. If the payment is over £100 then the card issuer will have joint liability for a financial failure and will have to refund you any money you lose as a result.