Travel What we can learn from the EU about how...

What we can learn from the EU about how to protect our holidays

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One of the side-effects of Brexit is not only that current laws deriving from EU legislation may be ditched, but that future improvements in consumer protection which might come about as the EU reviews its directives no longer automatically apply to us.Â

The practical effects of this divergence is about to be highlighted for travellers, as both the EU and the UK government reconsider consumer protection arrangements for holidays in the light both of what happened during the pandemic and, rather later in the day, the collapse of Thomas Cook in 2019. The EU has just published its proposals, while the deadline for submissions to our own UK review of the original EU package travel legislation passed this week.

It is clear from the proposals it has adopted that the EU is on a mission to improve protections even further with travellers at the forefront of its proposals. But the mood music from the Government here does not feel so consumer friendly. If that is, I am reading the tone of this statement from the Department for Business and Trade correctly: “We are particularly aiming to look at whether the regulations strike the right balance between consumer protections and business freedoms.”Â

When it comes to package holidays, the EU’s latest proposals focus on the following areas. I have given my verdict on each. Let’s hope, in its own review, the UK government learns from this approach and remembers and doesn’t put the interests of shareholders above those of holidaymakers.

Timely refunds

The current right (which also applies in the UK), that you should be paid a refund within 14 days of a package operator cancelling a holiday was widely ignored by travel companies during the pandemic, with many operators saying it was an impossible deadline to meet because they were struggling to get the money back from airlines that they they needed to refund their customers. The EU is proposing new rules so that such refunds must be made by service providers (such as airlines) to operators within seven days, so that consumers can receive theirs within the two-week limit.
Verdict: This is a no-brainer and a sensible lesson learned from the pandemic.

Later payments

The EU proposes that deposits for package holidays should not be higher than 25 per cent of the package price (except in certain circumstances). More importantly, tour operators won’t be able to ask for the full balance of the holiday cost earlier than 28 days before the departure date. 
Verdict: This time limit is much later and much more satisfactory than typical UK booking conditions. In this country we usually have to pay the full cost of the holiday eight to 10 weeks ahead of departure. Shortening that can only be a good thing for consumers.

Protected vouchers

During the pandemic, the issuing of vouchers instead of cash refunds for cancelled holidays was a key way that many travel businesses managed to stay afloat. It was a useful compromise in extreme times. But it only worked in the UK because special provisions were put in place by the bonding authority, Atol, to guarantee those vouchers. The EU’s proposals would greatly simplify things so that vouchers must be refunded automatically if not used before the end of their validity period. And all vouchers and refunds would be covered by insolvency protection rules (such as the Atol provisions in this country).
Verdict: Atol handled the voucher system relatively well during the pandemic, but it was still complicated for consumers to grasp and time-consuming to administer. These proposals seem like an obvious and sensible rationalisation which we would do well to mirror.

Clearer information about packages

The rules around what does and doesn’t constitute a package holiday have always been and remain, incredibly complicated for ordinary punters to understand. But it is very important for consumers because packages must be financially guaranteed by law so that if the travel company goes out of business before you travel, or while you are away, you will get a full refund. The EU is proposing rules to make that clearer at the point of purchase which arrangements are covered.
Verdict: This is something which the UK protection scheme, Atol, has long struggled with. The EU proposal feels a bit vague. I would look at it the other way and make it a legal requirement for a company selling travel arrangements in this country to tell you when there is no financial protection in place.Â

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