The Week in Focus: Be wary of a post-TCF world

The Week in Focus: Be wary of a post-TCF world
By admin


The torturous process of reforming travel agent licensing and consumer financial protection continues to be just that. Torturous.

Lord knows what it must be like for Jayson Westbury, chief executive of the Australian Federation of Travel Agents, who has really been spearheading the charge, if such a word can be used for a snail-paced process like this.

It must be enormously frustrating.

But, while it may not seem it, we are getting somewhere, and a submission from AFTA concerning the Travel Industry

Transition Plan took us a small step forward this week. Other parties have also submitted responses but few have been made public.

It is safe to assume however that the agency groups are in general agreement with AFTA’s recommendation and it must be hoped that a meeting in December of the powers that be will ratify these ideas and the process can move forward with purpose.

Questions are regularly asked about what will replace the Travel Compensation Fund when the body is wound down, as now seems inevitable, be it next year or in three years’ time. Even the TCF would probably admit privately that its days are numbered.

From where I’m standing the answer to that is not a lot. In the absence of state travel agent licencing there will be a voluntary accreditation scheme and the industry will generally self regulate. All fine.

But the bottom line for consumers is that in the absence of a TCF they will not be protected should another Kumuka go under, as will inevitably happen.

Now this needs clarifying. The TCF’s remit is far too narrow and the scheme is outdated. Participants are paying for the failings of others without any

But there can be no doubt that the TCF has helped, and will continue to help consumers, who have booked a holiday in good faith through a licensed agent and wholesaler which then goes to the wall.

As far as I can tell, that financial help will cease to exist when the TCF goes and, not withstanding protection covered by credit card providers, the consumer will be out of pocket.

There is some suggestion that insurance companies will launch insolvency policies when the time comes. But from what I can gather, there is little appetite for this from insurers, at least not yet.

Some people in the industry have compared travel to other industries which don’t have TCF schemes. The argument goes that when you buy a fridge and the firm collapses, you don’t automatically get refunded, so why should travel be any different?

In my opinion the two are incomparable. For a start, when you buy a TV or a fridge or most other goods, you walk away with it at the of the transaction. With travel, you have nothing but a piece or paper for weeks and months before you see the product. You are buying on trust.

In addition, a holiday is an emotional, big ticket item. Without wishing to be over dramatic, we live for our precious holidays and time away from the office.

If a consumer is unable to be refunded after booking through a travel agent or wholesaler, there could be a backlash which the industry may not like.

The national media lap up tales of people stranded overseas after an Air Australia-type collapse. The same could happen when the next Kumuka goes bust and that will not be a good look for the trade.

Reform is needed and it’s perfectly understandable that agents are tired of putting money in a pot that they will never get any benefit from. But let’s not forget the consumer in all this and what it could mean further down the line.

Email the Travel Weekly team at traveldesk@travelweekly.com.au

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