Package holiday companies have been warned by the competition watchdog to respect the refund rights of holidaymakers ahead of the summer.
The Competition and Markets Authority (CMA) published an open letter to the sector and has also sent it directly to 100 travel firms with the most complaints about them.
The letter reminds the firms of their legal obligations and of the need to ensure refund options are clear and accessible.
Tui UK has now given a formal commitment – known as ‘undertakings’ – to provide clearer information on refunds upfront to customers whose holidays have been cancelled due to Covid-19, as a result of CMA action.
The UK’s largest travel company had already taken steps to meet concerns raised by the CMA by improving the information it provides to customers and making it easier for people to get their money back.
Today’s letter and the commitments from Tui follow action already taken against five firms, which have provided more than £200 million in refunds.
The CMA has taken action against Teletext Holidays and secured refund commitments from LoveHolidays, lastminute.com, Virgin Holidays and Tui UK.
The authority said it had received more than 23,000 complaints from consumers since March 2020 about refund issues relating to package holidays that could not go ahead due to the pandemic.
In acknowledgement of this, the letter to the package travel sector sets out what businesses should provide and what customers can expect, including:
Holidays cancelled by package holiday companies must be refunded within 14 days under the Package Travel Regulations (PTRs).
Any offer of a refund credit note must be accompanied by the option of a full refund. Customers should be able to exchange their credit note for a refund at any time.
People have a right to a full refund where they decide to cancel their package because unavoidable and extraordinary circumstances at the destination significantly affect the holiday they have booked or their travel there.
If the FCDO (Foreign, Commonwealth and Development Office) is advising against travel to the package holiday destination when the consumer is due to leave, that is, in the CMA’s view, strong evidence that these unavoidable and extraordinary circumstances are likely to apply. If the consumer is refused a full refund, the package holiday company should fully explain why it disagrees that the holiday or travel is significantly affected.
The eight-page letter has been sent from CMA consumer group director Hayley Fletcher.
It warned: “If the CMA continues to receive complaints about organisers which indicate consumer law breaches, the organisers concerned may face enforcement action against them by the CMA.
“Local authority trading standards departments and sectoral regulators, such as the Civil Aviation Authority, also have powers to take enforcement action, and individual consumers have the option of pursuing a claim against organisers in court.”
CMA chief executive Andrea Coscelli (pictured) said: “International travel is set to resume soon and lots of people will be considering a long-awaited trip abroad. With that in mind, we want to make sure people are fully aware of their refund rights, so they can make informed choices about booking a holiday.
“We’ve secured millions in refunds for people who couldn’t go on their hard-earned trips over the past year and now we’re calling on package holiday companies to make the refund process less hassle in the future.
“We expect all firms to give clear cancellation options and will consider appropriate steps if we see companies breaking the law by refusing or delaying refunds this summer.”
Which? Travel editor Rory Boland said: “With international travel set to resume, we must not see a repeat of the fiasco that took place last year, which saw some travel firms break the law by withholding refunds from customers for months after their trips were cancelled.
“Earlier this month Which? revealed that some of the UK’s largest holiday companies were suggesting they may break the law again this summer. It’s encouraging that the regulator has set out its expectations of firms, and it must take strong action quickly against operators that drag their feet on refunds or mislead customers over their rights.
“Travellers considering a holiday this year should only book with companies that guarantee in their flexible booking terms that they will be able to give full refunds if a country is moved from the green list to amber, or if lockdowns, quarantine or other disruption prevents them from travelling.”