Financial liability built up through the issuing of Covid-19 refund credit notes could lead industry regulators to favour the use of trusts, according to experts.

Speaking on a special two-part Travel Weekly Roadmap to Recovery webcast, Kirsteen Vickerstaff, On the Beach general counsel, said government reluctance to make a clear statement about Atol standing behind RCNs was likely to be due to calculations of the cost.

“As part of that very scary calculation, I imagine the government saying, ‘we want to put this back on the industry’. And I think the trust account is an ideal structure to go down.”

Vickerstaff said current industry regulation was complex, fragmented and split across different government departments, meaning customers did not understand it.

“It’s completely uneven, if what we’re trying to get to is a level playing field. Depending on how the customer’s booked and what they’ve booked they might have double coverage or no coverage,” she said.

“How on earth do we expect a customer to understand that? How do we regain that customer confidence? It needs a complete review.

“And we definitely need that airline insolvency review to be dusted off, because it’s been sitting on the shelf for a long time.”

On the Beach has had CAA-approved trust account since 2004 when it acquired an Atol licence ahead of regulatory reform which brought OTAs under the scheme.

Vickerstaff said seasonality of cashflow can be challenging, but firms complying with CAA liquidity rules should find transition to a trust not as hard as they might expect.

“If you’re not complying with the CAA’s tough liquidity rules then, frankly, that’s even more reason to be in a trust structure,” she said.