Embezzlement Optional

The Department for Business & Trade and Kevin Hollinrake MP, finally launched the Package Travel Regulations consultation last week. Given how long they have been working on this, it should have been better. Much better.

This is an opportunity to finally impose a legal requirement to safeguard Client money in travel (for packages), to bring it in line with other major industries. An opportunity to simplify the complex and fragmented regulations which few of the travelling public understand.

The ATOL scheme is the policing and fulfilment of packages which include a flight. ATOL is flawed, but licences are reviewed each year and the Air Travel Trust (ATT) exists to cover the shortfall when a company fails and there is money ‘missing’. For non-flight packages there is no scrutiny or licensing of retailers, no policing that the PTR’s are met with regard to financial protection (Trust/Bond/Insurance) and no ATT type fund to act as the back stop.

Without policing the PTR rules on Non-flight packages, the rules are optional, as is taking Client’s money they have paid for a holiday yet to depart and spending it on something else without their knowledge. Embezzlement.

‘Embezzlement refers to a form of white-collar crime in which a person or entity intentionally misappropriates the assets entrusted to them. In this type of fraud, the embezzler attains the assets lawfully and has the right to possess them, but the assets are then used for unintended purposes’ (Investopedia)

The ATOL consultation appears to be heading towards a position where Client money taken for a package holiday, yet to depart, cannot be mis-spent as ‘Working Capital’ or paid as a dividend as is currently allowed. Why is this consultation silent on the same issue?

The simplest and most effective thing this consultation could do is to work with the CAA and move non-flight packages under ATOL. Packages without a flight are less of a repatriation risk, but the other risks are common and the fee could be lower for non-flight packages based on risk.

Lamentably this consultation does not seek to address this. Instead it suggests removing some less expensive holidays from the protection of the PTR’s.

The one positive in these 30 pages is addressing the Linked Travel loophole. However, the consultation seems equally open to make this loophole larger as it does to closing it.

Travel is the only major UK industry where it is legal to embezzle Client money. Solicitors, Bookmakers and even Funeral Directors would all be breaking the law if they behaved in the same way.

As it stands this consultation is to the detriment of the consumer and doesn’t address the fundamental issues.