ACTA says proposed changes to the funding framework and fees of the Travel Industry Council of Ontario (TICO) are “band-aids on a broken system,” and is calling for a complete overhaul of the province’s Travel Industry Act.
The comments from the travel advisor organization come as TICO sets out to consult with registrants on the proposed changes.
Wendy Paradis (Photo Credit: Wendy Paradis)
“Overall, we find TICO’s proposals to be essentially cosmetic changes, “said ACTA president Wendy Paradis. “These are band-aids on a broken system. The proposed funding framework is not based on the risk profile of the registrant, and the consumer is not legislated to contribute, leaving the burden squarely on the shoulders of Ontario travel agencies and tour operators.”
Paradis added: “The window to change the system is open now and it could be years before it is opened again. ACTA, our members and other industry associations need to continue to advocate to the Ontario government to finally fix this 40-year-old legislation and its regulations, which in no way reflect the environment of the Ontario travel industry today.”
ACTA says that today, over 95% of travel transactions are made using credit cards, which historically provides the primary consumer protection.
The group says the risk lies with several possible parties:
· Registrants that accept cash or cheque.
· Unregulated tour operators.
· Federally regulated airlines and cruise lines residing outside Canada.
ACTA maintains that contributions to the Ontario Travel Compensation Fund should be paid for by the beneficiaries of the Fund – consumers. “Any registrant fees should be based on the risk profile and not a blanket approach,” ACTA adds.
Response To TICO’s Proposals
ACTA says it is important for Ontario travel industry members to evaluate TICO registrant fees and Compensation Fund contributions together.
“The reduction in variable Compensation Fund fees is directly offset by permanent increases in registration fees based on sales volume, along with an increase in the fixed minimum registration fee,” ACTA states.
In order for ACTA to understand this impact further, ACTA is encouraging Ontario travel agencies and host agencies to use TICO’s fee estimate calculator, and advise ACTA of the results at [email protected].
Individual results shared will remain confidential, with only aggregate information being used in our advocacy message.
Richard Smart is CEO of the Travel Industry Council of Ontario (TICO). (Photo Credit: Travel Industry Council of Ontario)
ACTA Says TICO Must Reduce Fund Operating Costs
ACTA says that since the TICO Report recommends a significant reduction in the Compensation Fund and no consumer contribution, the Ontario government should review all TICO expenses and what the Fund will cover in the future.
“Currently, approximately 72% of TICO operation expenses are funded through the Compensation Fund --an average of almost $3M/year over 2016-2020,” ACTA says.
“Without a significant reduction in the cost of TICO operations and expenses-- this is not sustainable going forward. Even under the new proposal, we estimate that TICO will still take $1 million a year from the Fund to cover expenses,” the group adds.
Removal Of End Supplier Coverage Is A "Positive Step"
ACTA says the proposed removal of coverage of cruise lines and airlines -- both non-contributing end-suppliers -- is a positive step toward change.
The group adds a caveat: “It is important to note that Section 46 of the Travel Industry Act Regulations still states that if a registrant acquires rights to travel services for resale, and the supplier fails to provide the travel services paid for by a customer, the registrant is still liable and therefore, ACTA believes this section of the regulations must be updated with more equitable wording.”
Maximum Claim Increase Still Inadequate, ACTA Says
ACTA says the proposal to increase the maximum Compensation Fund payment per person to $10,000 from $5,000 for consumers is an improvement “on the surface,” but the group says the remaining caps of $5M/event and $2M in repatriation would leave consumers with “cents on the dollar” in the event of a large failure.
“Consumer Contribution Model Is Only Way To Make Fund Sustainable”
ACTA points out that TICO is the payor of last resort with registrants being the first to reimburse, followed by credit card companies and then insurance policies, before claims ever hit the Ontario Compensation Fund.
“If the Ontario government remains motivated to legislate enhanced consumer protection to make the consumer “whole” in the event of potential registrant bankruptcies or insolvencies, the only way this is sustainable is through a consumer contribution model,” ACTA concludes.
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