Comment: Questions remain over reform
As we have said on more than one occasion, Jayson Westbury, the chief executive of the Australian Federation of Travel Agents, has worked a minor miracle in successfully driving through reform of travel agent licensing.
It may have taken years for state and territory governments to agree to such reform, but the fact they agreed at all was an outcome few in the industry could have predicted. And for that, Westbury can take full credit.
Yet dismantling and then eliminating an existing structure or system is one thing. Replacing it with a strong and viable alternative is quite another. And this is where the contentious issue of reform in the travel industry gets interesting.
If anyone needs reminding, this reform is bringing fundamental change to the way the industry is regulated and has far reaching implications for every single travel agent in the country.
With that in mind, it was surprising this week to see Westbury criticise agency groups for continuing to raise questions about AFTA’s voluntary accreditation scheme (ATAS), how it will work and what it could all mean in a post Travel Compensation Fund world.
He argued, unfairly in my view, that those questioning the reform “do so for their own commercial gain rather than for the good of the industry at large”.
The opinions and concerns aired by retailers, most publicly by the home working groups, have been entirely valid and some of their arguments have been articulated in compelling fashion, not least by TravelManagers chairman Barry Mayo in a comment piece for Travel Today.
Indeed, it would be remiss of retailers not to question the implications of the voluntary accreditation scheme, such is its importance.
None of this means the accreditation scheme is flawed, just that debate will continue to rage – and probably long after the scheme officially kicks off on July 1 next year.
Furthermore, while AFTA always flagged the prospect of the industry governing itself via a voluntary scheme, the detail only started to emerge in recent months. Indeed, critical elements, such as the accreditation costs and final membership criteria, are only surfacing this week at a series of transitional workshops taking place around the country.
Much of the debate has centered, quite rightly, on the ramifications for the consumer once the Travel Compensation Fund’s remaining powers are withdrawn next year.
The TCF’s job of scrutinising the financial health of its travel agent participants has already been eliminated, with retailers this year spared the task of presenting a set of audited accounts. And from next July, the TCF will no longer offer financial protection for consumers, a key area of discussion. Its final year, in 2015, will be spent paying out claims but only on companies which fall over prior to June 30, 2014.
Westbury emphasised this week that 97% of consumers were oblivious to the existence of the TCF or its benefits. But the fact remains that the TCF had 95,000 claimants since 1988 and paid out $63 million in refunds, money that consumers might otherwise never have seen had the fund not been around. People might not have been aware of it, but they sure learned quickly when the travel agency or wholesaler collapsed.
I also believe that the vast majority of consumers simply assumed they would be refunded if something went terribly wrong, so whether they knew of the TCF’s existence is largely irrelevant.
However, the TCF is going, that much is clear, and it’s something of a pointless exercise debating its various virtues and flaws, of which there are several of both. It’s what consumer safeguards will be in place post June 30 that is the pressing issue and occupying the thoughts of agents.
The answer, apart from Australian Consumer Law, is insurance products that will protect both the agent and consumer. The first of the policies, the Supplier Insolvency Insurance, will launch on Monday in Melbourne with the Travel Intermediary Insolvency Insurance – designed to protect the public – expected to be available in March or April.
But taking out these policies will be voluntary. AFTA, even if it had the desire, could not make it mandatory, so it must rely on the good sense of ATAS members to do the right thing.
Should the agent take out the intermediary cover, it is presumed they will on-sell the policy to clients, with AFTA suggesting it could be an additional revenue stream.
But what of those agents who choose not to purchase insurance? Quite simply, it could leave its customers horribly exposed and, in the event of a company collapse, could taint the rest of the industry.
It's quite possible that one agency provides full protection while its competitor across the road offers none, yet both could carry the accredited stamp of approval from the industry’s peak body. It is a potentially confusing situation for the consumer.
A holiday is an emotional and hugely important purchase. It’s also a big money item where you hand over thousands of dollars sometimes months in advance. All those things make the travel industry unlike many others. It is unique.
It must be hoped that the vast majority of agents will provide, or at least offer financial safeguards. The larger chains will unquestionably do so.
Much has been written and said about the industry reforms, and with AFTA's accreditation scheme still several months from launch, debate and discussion will inevitably continue. And that is just as it should be.
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