The Office of the Auditor General of Ontario (OAGO) has released its value-for-money audit of the Travel Industry Council of Ontario (TICO). Among other questions raised, OAGO asks whether the cost to administer the travel Compensation Fund may outweigh the benefits it provides to customers.
Over the past 10 years, TICO registrants booked over $133 billion in travel services for consumers, while the Compensation Fund paid approximately $350,000 annually on average in compensation to consumers, or less than 0.003% of annual travel services booked by TICO’s registrants.
TICO’s estimated annual cost for 2022/23 to administer the Fund of $1 million is nearly three times more than the $350,000 in compensation paid from the Fund to consumers on average over the last 10 years.
The report also found that TICO has used an estimated $31 million from the Compensation Fund to cover its own operating costs since its creation in 1997.
“TICO has routinely used funds from the Travel Industry Compensation Fund (Compensation Fund) to cover operating costs that cannot reasonably be attributed to the Fund,” OAGO stated in a report summary.
The OAGO conducts audits of government and broader public sector organizations to ensure they are operating effectively and efficiently. TICO’s report is part of a package that includes audits of 11 other organizations.
The report notes that the travel industry and the way consumers purchase travel services have changed significantly since TICO was established. Consumers increasingly purchase travel services online and in 2018/2019, the last full year before the pandemic, TICO registrants booked less than half (48%) of the approximately $38.3 billion that Ontario residents spent on travelling in 2019.
The Ontario Auditor General Office's report on TICO. (Photo Credit: Bruce Parkinson)
In compiling the report, the OAGO looked at how the travel industry is regulated in other parts of the world.
“Many jurisdictions did not have specific travel seller regulations at all,” the report states, “such as Australia whose government repealed travel seller regulations in 2014 because they had become outdated.”
TICO CEO Richard Smart says the report reveals areas where TICO can enhance its processes, systems and procedures.
“TICO values the objective third-party perspective that this review has provided and the opportunities to enhance the way we deliver on our consumer protection mandate. Our team is dedicated to addressing the recommendations presented in the report, a number of which are already in progress. We are committed to being transparent and accountable as we share our action plan in the months ahead.”
Other concerns addressed by the OAGO in the report include:
· TICO could not demonstrate justification for holding up to $2 Million in security deposits from registrants.
· 30% of TICO registrants have not had a compliance inspection in the last 10 years.
· Half of Ontarians surveyed who were involved in travel planning for their household were unaware of TICO’s existence.
The 51-page report is summarized by the OAGO with three conclusions:
· TICO did not have processes to consistently administer the Travel Industry Act, 2002 (Act) effectively in order to register and regulate travel agents and wholesalers, and to protect consumers when purchasing travel services through a travel agent or wholesaler.
· TICO was not fully effective in publicly reporting on its administration of the Act.
· The Ministry’s oversight processes to ensure that TICO effectively administers the Act and fulfills its mandate were not fully effective.
The OAGO’s report contains a total of 16 recommendations, with nine of those directed at TICO, six directed at both TICO and the Ministry of Public and Business Service Delivery (MPBSD) and one directed specifically at MPBSD.
The report also makes this suggestion: “Travel industry regulation in Ontario could benefit from a comprehensive review.”
Both TICO’s Smart and travel advisor organization ACTA – which has been vocally critical of TICO’s efforts – say they would welcome a review of industry regulation in Ontario.
“TICO is committed to working collaboratively with MPBSD as it considers potential regulatory changes and what the future of consumer protection should look like in the years ahead,” said Smart.
ACTA logo (Photo Credit: ACTA logo)
“ACTA is pleased to see that the long-awaited “Value for Money Audit -- Travel Industry Council of Ontario” was released today by the Office of the Ontario Auditor General,” the group said in a statement.
“The 51-page report is comprehensive and clearly reflects the fact that the Travel Industry Act and current oversight of the industry do not properly reflect the environment of today’s travel industry. ACTA has been advocating for a thorough review and rewrite of the Travel Industry Act and that consumers and industry deserve much more than band aids on a broken system,” ACTA added.
TICO says it will provide its implementation plan on the report’s recommendations to the Minister of Public and Business Service Delivery in early 2024. TICO will also report on its progress to address the recommendations through a Public Action Plan, which will be posted on TICO’s website.
“TICO will enhance its policies and procedures, risk-based decision-making processes and its collection and analysis of data to improve business intelligence of the travel marketplace and the businesses it regulates,” said Smart.
You can view the Ontario Auditor General’s summary of the report here, and the full report can be accessed here.
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