CAA consultation on ATOL Reform - Which? response

Summary:

• The travel disruption caused by the Covid-19 pandemic and the scale and severity of the refunds crisis has exposed the ineffectiveness of existing payment protections and widespread commercial practices in the travel industry.
• Government, regulators, and industry must learn the lessons of the last 18 months and address the lack of adequate payment protections that are accessible and affordable to all consumers for an effective reopening of travel.
• To restore confidence and trust in the travel sector, the Government and regulators must view the consumer as a central stakeholder in their reform agendas. The multiple reviews of travel regulations, including proposals to give the CAA stronger powers, must not be a missed opportunity to drive positive change and reduce consumer harm in this key sector.
• Which? strongly supports the objectives of this consultation and the proposals to strengthen ATOL holders’ financial health while enhancing consumer protections. As part of this, we urge the CAA to evaluate consumer understanding of the scheme, as our research shows that many could be struggling to make informed decisions when booking travel and could be exposed to substantial financial losses when things go wrong. 
• We believe partial segregation would provide significant benefits to consumers. We also support the proposal to introduce risk-based APC calculations, which we see as an effective method to incentivise financial resilience in businesses by encouraging ATOL holders to take steps to reduce their risk to consumers and exposure to the ATOL fund as reflected in the portion of customer prepayments that are segregated.
• The implementation of the changes proposed should be gradual and carefully managed, ensuring the new rules don't impact the market negatively by reducing competition among players, and choice and value to consumers.
• We urge the regulator to accelerate work on the ATOL reform, ensuring it has appropriate support from the Government, and to publish the findings from its business impact assessment as soon as possible and before the launch of the second ATOL consultation.