04 Mar

ABTA responds to CAA Rebalancing Consultation

ABTA welcomes the retention of the Small Business ATOL (SBA) and the move away from the proposal to license accountants

But urges CAA to ensure that the new financial tests are proportionate and the timescales reasonable and calls on the CAA to publish the draft tests and transition proposals and consult on them before finalising them

ABTA today welcomed the CAA’s decision to retain the Small Business ATOL and confirmed its support for the introduction of new financial tests and requirements to ensure ATOL holders are financially robust. ABTA has however cautioned that the new tests must be proportionate to business risk and that sufficient transition time is given to existing ATOL holders.

John de Vial, Head of Financial Protection ABTA said: “We support the changes to introduce more sophisticated financial tests for ATOL holders, particularly for SBAs where there were none, it’s in everyone’s interests for ATOL holders to be strong and robust companies to ensure confidence in the industry. Introducing a financial test for all ATOL holders makes sense but it is important that the new tests are proportionate to business risk. We called on the CAA to consult with the industry and share what the proposed tests might look like and we hope that this will happen before they are finalised – they were not included in the June 2014 Consultation or the CAA Decision document published today, which acknowledges that the regulatory cost impact assessment cannot be completed without knowing what the tests are.

We are pleased to see that the proposed minimum Bond for new ATOL holders, including SBAs, has been reduced from £75,000 to £50,000. However, this is still £10,000 higher than the current minimum Bond for a standard ATOL. Our data shows that this would over-bond (compared to a standard 15% bonding rate for new ATOLs) more than one third of all ATOL holders and nearly two thirds of SBA ATOL holders. We think that this is unnecessary and contrary to Government policy in relation to supporting competition and new business start-ups, particularly SMEs and microbusinesses.

Ensuring companies have an adequate transition period to respond to the changes is vital. The CAA initially proposed a three year transition period and we would urge them to maintain this and provide further clarity on the proposed tests. It is unreasonable to expect companies to meet these changes by October 1st. Given that we expect the new Directive to be published in May and that a three year transition period was consulted on, we still believe these changes should be synchronised with the new Directive and DfT ATOL Reform agenda.

It is particularly disappointing when there may be a number of businesses requiring an ATOL to comply with the new Package Travel Directive scope.”

ABTA noted the following regarding the specific changes outlined to the ATOL scheme: