The Association of Atol Companies is launching a “wholesale review” into when customer money is collected by agents and passed on to suppliers in the wake of Thomas Cook’s collapse.

Some operators lost vast sums of money after it emerged Thomas Cook retail had taken full customer payments well in advance of departure and not passed them on, the AAC’s legal advisor, Alan Bowen, revealed.

Bowen said the AAC was setting up a committee to examine financial protection for operators and was in talks with Abta and the CAA.

“We have a number of members who have lost substantial amounts of money,” he said.

“Now there is a view that it can’t continue as it has in the past. We were not aware what Thomas Cook was doing. It makes us all very wary.  We can’t find ourselves in this situation again.”

Last week, Travel Weekly reported Thomas Cook had been offering customers a 5% discount in August and September in return for full monies up front for holidays due to depart up to nine months later.

Customer balances should be collected about 16 weeks before departure and passed on to suppliers 13 weeks before, as per agency agreements. But Bowen claimed some customer payments were taken up to 18 months before departure, and this was happening “all year round”.

He said he knew of one operator that sold a £12,000 holiday departing next June through Thomas Cook. The agency had collected the full amount but passed on only the £1,000 deposit.

“Operators with bookings for 2020 assumed they would be losing the deposits of £150 to £200 per person, but have discovered customers paid thousands [up front],” he said.

He warned operators might look to develop more direct-sell models but added: “That’s not going to help anybody. We are going to have a wholesale review of how money is collected. We may have to move to weekly payments.

“We have got to find a scheme that protects the tour operator, but we also need some leeway that helps cashflow, otherwise everything will have to go through a trust.

“We will look for a system that’s simple and easy to operate, cheap and gives a guarantee to operators.”

Bowen estimated the total loss for all suppliers, including hoteliers, customers and the CAA, could run into billions of pounds. And he warned: “There is still the possibility of other failures. The next Atol renewals [in March 2020] will be worse.”

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