Comment: The cost of financial protection

Comment: The cost of financial protection

Noel Josephides, managing director Sunvil

I am repeatedly asked by the press and Abta members why I cannot promise to do my utmost to lower bonding and credit card costs, as Roger – my opponent for Abta chairman – is doing.

Well, I suppose I do not want to promise something that I may well not be able to deliver. I’m afraid I am no politician. However, I do know my stuff and perhaps the time has come for me to go into a little more detail.

I don’t like to blow my own trumpet but there is little you can teach me about financial protection, bonding and insurance. I was a founding director and subsequently chairman of the Association of Independent Tour Operators’ non-licensable turnover bonding scheme.

The Aitoscheme was a government-approved body. We, at Aito, conceived it in 1990 and I was chairman from 1994 until March this year when it was closed down because Aito could not find anyone else to take it over.

During the 23 years for which I was involved, we saved companies from bankruptcy, we advised companies, we called companies’ bonds and overall I stood in judgement over my fellow operators – something I certainly didn’t relish.

But, we did a good job and had a first-rate bonding scheme which helped a great many companies at a time when they were at their most vulnerable.

As a result and after four years as chairman of Abta’s Membership Committee, I know the financial ins and outs of tour operating and travel agency financials like the back of my hand.

I began negotiating with credit card companies about 15 years ago and crossed swords with many in my attempts to lower the charge rates for tour operators. I know how the risk departments of merchant acquirers think, which is why I cannot promise success on the credit card front.

The CAA will tell you that they have deals with the credit card companies and that they (the credit card companies) should never, therefore, have to seek bonds from or delay payments to travel organisations that are Atol holders.

The credit card companies will tell you otherwise. The merchant acquirers’ sales departments will promise you everything, but their risk departments will turn the screw.

For years now I have campaigned to have credit cards taken out of the picture when it comes to collapses and have the bond or Air Travel Trust Fund pay out for failures in their entirety.

This is something which I will bring up yet again during the current call for evidence – I don’t give up easily – but there is no guarantee, sadly, that this will either lower the rates payable by the industry or prevent the merchant acquirers asking for bonds. Believe me, I’ve been there.

Do you think the Government is consulting on the future of financial protection because the current system is too expensive? Not at all – the Government knows the system is way too cheap and it wants out.

It will be an enormous battle to maintain such a cheap system in the private sector. Ask those who pay through the nose for non-licensable insurance cover and they will tell you how cheap the £2.50 APC for Atol holders is.

I know what is possible and what is not and the Abta board and the Abta secretariat know it, too. The best we can do is to minimise the increase in the cost of financial protection because it certainly will not go down.

I never pull the wool over anyone’s eyes and I am not about to start now.

Noel Josephides is managing director of Sunvil and a candidate for Abta chairman. He is standing against All Leisure Group chairman Roger Allard in the election


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