The UK Civil Aviation Authority (CAA) is today publishing the findings of an independent review into its claims handlings procedures following failures of large travel operator businesses licensed under the ATOL scheme.

Walter Merricks CBE, former Chief Financial Ombudsman at the Financial Ombudsman Service, was appointed last May to oversee the review and to examine, why, following the collapse of XL Leisure Group in 2008, claims took longer than anticipated to settle and how arrangements could be improved. The report sets out recommendations on how the CAA could develop and improve its claims handling procedure in preparation for any future large failures.

This independent review comes ahead of a broader programme of work to reform the Air Travel Organiser’s Licensing Scheme (ATOL). A number of recommendations raised are being addressed through the Department for Transport’s ATOL Reform proposals; to be consulted on later this year. Other recommendations will be considered alongside the development of the CAA’s proposed ATOL Certificate, which aims to provide clarity and improving understanding of the protection provided by the ATOL scheme for holidaymakers.

The recommendations include:
• Simplifying the claims validation process
• Considering the use of on-line technology and tracking systems, and improving access to booking data
• Working with industry to improve travel agents’ paperwork
• Improving preparation for any future large failures


Richard Jackson, Director of Consumer Protection at the CAA said:

“The CAA has worked hard to tackle the problems associated with claims handling, particularly following the collapse of XL. We have considered the recommendations carefully ensuring we offer consumers the best possible response when handling their claims. A number of points raised have already been addressed and we have published an Action Plan setting out how we will respond to others.

“As highlighted in the report, the CAA alone cannot resolve all the problems; the travel industry has a major role to play in ensuring paperwork issued to consumers improves, removing the need for complex and prolonged claims management. Today we are publishing the report in full, and we will keep the industry informed as this work continues.”

Walter Merricks said:

“This report represents my own assessment of what ought reasonably to be put in place to provide an appropriate and modern service to ATOL claimants. I am encouraged to see that many of my recommendations have already been addressed in part by the CAA and in part through Government proposals to reform ATOL. I look forward to seeing further improvements over the coming year.”

The Air Travel Trust (ATT) announced recently that it was amending its payment policy. It was becoming increasingly common that in order to refund ATOL protected customers, a considerable amount of time and effort was spent dealing with claims where documentation was either confusing or in some cases failed to correctly identify the extent to which customers were protected by ATOL.

The CAA recognises this action by the ATT as a stepping stone in response to recommendations raised by Walter Merricks’s report.

The full report is available to download here

The CAA Action Plan including the key recommendations and CAA action is available here

The CAA Press Notice and consultation document from May 2010 is available here

For more information contact the CAA press office on 0207 453 6030

Ends

Notes to Editors:

The CAA is the UK's specialist aviation regulator. Its activities include: making sure that the aviation industry meets the highest technical and operational safety standards; preventing holidaymakers from being stranded abroad or losing money because of tour operator insolvency; planning and regulating all UK airspace; and regulating airports, air traffic services and airlines and providing advice on aviation policy from an economic standpoint.

The Air Travel Organisers’ Licensing scheme (ATOL) is managed by the CAA. It gives comprehensive protection to holidaymakers from being stranded abroad or losing money when purchasing air holidays and flights from licensed tour operators. It is the only licensing scheme for tour operators that sell air holidays and flights. In holding a licence, tour operators meet European Package Travel Directive insolvency protection requirements.

If a licence holder fails, the CAA is responsible for ensuring customers are either repatriated back to the UK or receive a refund of payments made.

Repatriation costs and refunds are met by the Air Travel Trust Fund, the funds of which principally come from the ATOL Protection Contribution (APC) that each licence holder is required to make when it accepts a booking under its ATOL. In some circumstances a licence holder will have also provided a bond, which is used in the first instance to protect customers.