Travel Trust Association (TTA) is working on a proposal to launch a trust fund to protect both bed banks and agents in the event of a failure.

TTA has been looking into the issue following the ABTA ruling to force bed bank members to assume liability in the event of an agency failure, even if the bed banks have not received payment.

The ruling has resulted in Thomas Cook-owned hotels4u.com and Med Hotels, and youtravel.com leaving ABTA.

TTA has been in discussions with two of the larger bed banks about this issue. Under the new proposed trust fund, the bed banks would be members of TTA, but would be able to trade with any agency outside the consortium.

TTA director Steve Clark said: “I have been talking to a few of the bed banks and they have said ‘if you could do this, we would be very interested’.

The money collected from the agent will remain in the trust fund until the customer returns from their holiday. After that, TTA  would release the money from the trust fund to the supplier.

TTA is finalising the details and is looking at a bonding or insurance solution to cover pipeline monies.