Ski Holidays Loophole Underlines Need for ABTA-Bonded Holiday Firms

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Following the discovery of an "enormous loophole" in the Package Travel Regulations, the Association of Independent Tour Operators (AITO) is temporarily suspending its 100 per cent financial guarantee from 1 August.

The technicality, which relates to Tour Operator Failure insurance, was revealed after Devon and Cornwall police investigated the schools' ski operator Skiing Europe, an AITO member for 9 months until it left earlier this year.

Package Travel loopholeThe inquiry into the Devon-based firm began in March after Skiing Europe cancelled several school ski holidays and forced schools to cancel at the last minute. Thousands of students were left both without a holiday and out of pocket.

Following the investigation AITO had been hoping, on legal advice, to ensure all schools would be refunded their lost money. However, the association has since announced that Amtrust Europe, understood to have been insuring Skiing Europe for several years, has cancelled the policy it issued to Chris Reynard, a sole trader who operated as Skiing Europe.

AITO has urged schools and other organisations which booked during Skiing Europe's membership of the association (between 8 June 2010 and 10 March 2011) to contact them.

"This move has left many thousands of school children without the financial protection their schools and AITO believed they had, in the event that Chris Reynard is unable to meet their claims due to his insolvency," AITO explained.

"Amtrust Europe's position is that, as a result of material non-disclosure by Chris Reynard when applying for this insurance, they are entitled to cancel Skiing Europe's financial protection policy.

"AITO is disappointed that, following legal advice to the association, it appears Amtrust Europe is not prevented from so doing by Regulation 19 of the Package Travel Regulations which sets out the legal requirements applicable to these policies. We believe that this is a very serious shortcoming."

AITO said it believes that the per-person financial protection insurance policies held by 23 of its members (which give the insurer the right to cancel a policy after bookings with the consumer have been made) are not fit-for-purpose in providing financial security for the consumer.

AITO chairman Derek Moore said that the case throws into question the viability of many insurance policies currently in use in the travel industry. "AITO thus calls on government and the industry in general to look very closely at policy wordings so that such an unfortunate situation - denying consumers the cover for which they have paid - cannot occur in the future."

AITO hoped the suspension of its 100% financial guarantee would be temporary, adding that it would continue to seek a way of helping all school children affected, including those who booked prior to Skiing Europe joining AITO.

Nick Harris, Head of Travel at Simpson Millar LLP, stressed the importance of shopping around for the most reliable holidays. "Make sure you book with a reputable tour operator that's ABTA-bonded," said Nick. "The credit crunch and certain recent developments in the travel industry have led to some sharp practises. Whatever type of holiday you're booking, the formal undertaking of the ABTA bond means you'll be reimbursed if the operator goes bust."


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