Is my money protected when I book a trip?

Package holidays

The law requires tour operators to put in place financial security to protect monies paid for package holidays sold in the UK in the event of them going out of business (due to their financial failure). 

The purpose of the financial protection is:

• to arrange a refund or to assist you in obtaining a refund if you are yet to travel, and your package holiday booking cannot go ahead because the tour operator has gone out of business (financially failed)
• to minimise the disruption to your holiday if it has already started, to cover the costs of getting you to your return destination if your holiday includes return transport, and to arrange a refund for the parts of the holiday that can no longer be provided or to assist you in obtaining a refund. 

Package holidays that are for less than 24 hours, or are for business travel, may not be protected.

The financial protection for packages does not extend to everything- if you have unused vouchers issued by the business, or you were due a compensation payment, or a refund following a cancellation, the financial protection arranged by the tour operator will not refund you.
 

Linked travel arrangements 

The law requires the arranger of a linked travel arrangement (which may include a tour operator, travel agent or travel service provider) sold in the UK to put in place financial security to protect the monies you’ve paid for a travel service in the event that the service can’t be provided because the arranger of the linked travel arrangement goes out of business (due to their financial failure).

The purpose of the financial protection is:

• to arrange a refund for the travel service that you were unable to receive because the arranger of the linked travel arrangement has gone out of business whilst holding your money. 
• if the arranger of your linked travel arrangement was responsible for providing a transport service, to cover the costs of getting you to your return destination if your trip includes return transport

This is not the same as protection for package holidays. It only covers the event of the travel company that arranged the linked travel arrangement failing and your travel service(s) not being provided to you as a result. Other scenarios are not covered by the protection, for example where your travel services can still be provided notwithstanding the arranger failing, or if your linked travel arrangement is affected by the insolvency of another business e.g. a supplier of the service.

Examples of linked travel arrangement protection

You have booked a flight and a hotel as a linked travel arrangement through a travel company. The accommodation company providing the hotel goes bust before you travel. There is no protection for your money so you will not get a refund for the hotel. The airline is not required to refund you for the flight so you will have to pay again for a hotel or lose the money for the flight as well.

If the travel agent you booked with goes out of business, you should still be able to continue with the flight and accommodation that you booked.

How do I know if I’ve booked a package or a linked travel arrangement?

See our FAQ What is a package holiday and what is a linked travel arrangement?

Other travel arrangements

Oher travel arrangements do not, by law, have to be financially protected, but travel companies can choose to protect them. An example is a booking for accommodation only. 

Flights booked direct with airlines are not protected by any scheme of financial protection.

Travel agents

Unless a travel agent has arranged a linked travel arrangement, the law does not require a travel agent to put in place financial security to protect monies paid for travel service(s) (e.g. flight only or accommodation only) or packages sold in the UK in the event of them going out of business (due to their financial failure).

However, the failure of a travel agent should not affect your booking because they were not providing your travel service or package. The tour operator or other supplier with whom the travel agent made your booking (and with whom you have a contract) is responsible for providing your booked travel arrangements. You should contact this tour operator or supplier because your booking should still be going ahead – information on who they are will be in your paperwork (contract or emails). 

If you booked your travel service with an ABTA travel agent member and they subsequently go out of business (due to their financial failure), you cannot claim from the financial protection scheme administered by ABTA (except where you have booked a linked travel arrangement with the ABTA travel agent member and they have arranged their financial protection under the scheme administered by ABTA). For help understanding when you are booking through a travel agent see our FAQ What is the difference between a tour operator and a travel agent?

How do travel companies provide the protection?

There are a few ways in which travel companies can arrange to protect your money.      
  
For package holidays that do not include a flight and are sold to customers in the UK, travel companies may:

• Provide a bond to ABTA, or another organisation which is approved by the Department for Business and Trade (DBT) to administer a scheme of financial protection under the Package Travel and Linked Travel Arrangements Regulations 2018.
• Take out a financial failure insurance (FFI) policy.
• Deposit your money in a trust account. 

Travel companies may also choose to financially protect other travel arrangements (such as accommodation only, car hire, etc).

Under section 75 of the Consumer Credit Act, payments between £100 and £30,000 made by credit card are protected if the goods or services that you’ve paid for have not been provided.

Following the financial failure of an ABTA member responsible for providing your travel services (i.e. not an ABTA travel agent member), you can recover your money from the issuer of your credit card. If you used your credit card for a transaction of less than £100, you may be able to make a claim under the Visa and MasterCard scheme rules.

If you book your holiday from outside the UK, you must enquire with your travel company to see whether your holiday is protected. Protection against the tour operator’s financial failure might not apply unless they had opted to voluntarily protect your holiday.

Travel companies that provide packages which include a flight and are sold to customers in the UK must protect your money through the ATOL scheme operated by the Civil Aviation Authority (CAA).

Financial protection for travelling and holidays can be confusing. Remember that the easiest way to know if your arrangements will be protected is to ask your travel company if, and how, those arrangements are financially protected before you book with them.

You should also remember to check your travel insurance. Very few travel insurance policies cover companies going out of business (financially failing). They usually cover belongings, delays/cancellations and medical assistance, but don’t usually refund you or get you home if the travel company fails.

Claiming your money back following the failure of an ABTA member

When it comes to claiming your money back following the financial failure of an ABTA member, this depends on the financial protection arrangements that the failed ABTA member had in place. 

Claims for a package holiday including a flight, and some flight only sales, that are sold to customers in the UK are covered by the ATOL scheme. If this applies to you, your claim should be submitted to the Civil Aviation Authority (CAA). 

If the ABTA member financially protected your package not including a flight (e.g. coach, rail or cruise holidays), or your other travel arrangements (such as accommodation only, car hire, etc), and provided this protection:

• By way of a bond with ABTA, your claim would be administered by ABTA unless you made payments by credit card. If you made payments by credit card, you would need to submit your claim to the issuer of your credit card. 
  
  If your package included return transport and ABTA administers your claim, we can help you get to your return destination. 
   
• By way of a Financial Failure Insurance (FFI) policy, a bond with another organisation, or a trust account, you would need to submit your claim to the provider (or trustees) of those financial protection arrangements. Their contact details should be available on the website of the travel company that you booked with and/or the documents provided to you by the travel company at the time of your booking.
  
  If your package included return transport, the ABTA member should have arranged to cover the costs of getting you to your return destination.

If the ABTA member did not financially protect your travel arrangements, you won’t be able to submit a claim to ABTA. However, if you made payments by credit card you would be able to submit a claim to the issuer of your credit card.

Ask your travel agent for help. If you book with an ABTA travel agent member, they can help you with supplier failure insurance for products and services that are not automatically protected.