Which? returned to its campaign against refund credit notes on Saturday.

In doing so, it went beyond a correct assertion of consumers’ legal right to a cash refund to urge consumers to reject refund credit notes and, where these have been accepted, demand their replacement.

It did this on specious grounds.

In a press release, Which? warned that refund credit notes “could require lengthy and complicated authorisation, without any guarantee of your money back”.


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These twin assertions – of lengthy/complicated authorisation and lack of a guarantee – are partial truths at best. They are certainly not the whole truth.

It is true there has been no government guarantee that consumers holding refund credit notes will get their money back.

But Which?’s assertion that refund credit notes “could require lengthy and complicated authorisation” is linked to a confirmation by the CAA that cash refunds will indeed be made on refund credit notes where a company fails.

And it ignores the CAA’s clear statement that “the vast majority” of claims would not require authorisation.

Which?’s latest broadside on refunds follows the collapse of Shearings, which it explained “placed a spotlight on whether or not credit notes will allow customers to claim their money back”.

It stated: “Which? has learned that customers with outstanding refund credit notes (RCNs) may have to find and pay for a signature from a solicitor before they can secure a cash refund.

“Shearings’ customers with outstanding RCNs have been sent an Atol claim form for an ‘outstanding refund’, part of which needs to be witnessed by a solicitor, notary public, other Commissioner for Oaths, or Officer of a Court, as well as stamped with an official seal.”

It reported: “Which? contacted 10 solicitors’ firms and a notary public from to establish how practical securing this kind of authorisation would be under current circumstances, and found a number of frustrations in the process as well as fees costing up to £120.”

Of the 10 companies, five were closed and a sixth uncontactable. Two said it would cost £5 per document, one quoted £20 and another £40 with the money going to charity.

The notary public firm gave three separate quotes for the service ranging from £50 to £120. A notary public is a qualified lawyer offering authentication of certain types of document.

Which? noted the official fee for the service is £5, but firms are free to charge as they wish.

A ‘very rare’ anti-fraud measure

It is worth noting that Which? reported “Shearings customers with outstanding RCNs have been sent an Atol claim form for an ‘outstanding refund’,” because Which? continues to insist the entitlement to a refund is in doubt.

You might conclude that there is an alternative consumer-detriment story here in that law firms are levying charges ranging from £20-£120 for a £5 service. But there is more.

The Civil Aviation Authority (CAA) confirmed to Which? that it may ask consumers to sign a declaration form, witnessed by a solicitor, when processing this kind of refund claim to prevent fraud.

The CAA told Which? it was highly unlikely anyone would need to do this, that it is “very rare” that consumers need a solicitor to verify a claim.

Travel Weekly understands it is normally only when there is a lack of booking data following a failure, perhaps because systems have gone down.

In the case of Thomas Cook, which collapsed last September, company systems were turned off and there were subsequently a large number of fraudulent claims.

So the requirement is to ensure only genuine refund and refund credit note claims are paid in cases where booking data is missing.

The CAA told Which?: “Consumers that have been promised but have not yet received a refund for a cancelled Atol-protected booking are able to submit a claim in the event that their Atol holder ceases trading. This is one of the ways the Atol scheme helps to protect consumers from losing money.”

Read that again because it is confirmation from the CAA that refund credit notes are protected under Atol.

Which? repeated this CAA confirmation of protection under Atol merely as a “Right of reply” outside the main body of the text of its release.

Yet the CAA statement challenges the basis of Which?’s claims.

The CAA went on: “When processing this kind of claim, to prevent fraud and make sure we pay the right amount of money to the right people, we may ask consumers to sign a declaration form, witnessed by a solicitor.

“In the case of Shearings Holidays, it is unlikely that we will require this declaration from the vast majority of consumers.”

Only about 4% of Shearings’ bookings were protected by Atol. The majority of packages were protected by Abta or the Confederation of Passenger Transport (CPT). So Which? is basing its latest claims on a minority (as opposed to “the vast majority”) of 4% of Shearings’ customers.

The CAA has not challenged Abta on refund credit notes

Having laid out its case, Which? notes refund credit notes have been “promoted by The Association of British Travel Agents (ABTA) as a viable alternative to cash refunds”.

It is a minor point, but Abta has been called simply Abta and not “the Association of British Travel Agents” for more than a decade. One might expect Which? Travel to be aware of this given its attention to detail.

More important, bear in mind that Abta is itself a regulator and that the CAA, the Atol regulator, has not challenged Abta’s assertion that refund credit notes for Atol bookings are protected against insolvency.

Which? reports: “Despite Abta insisting that RCNs are financially protected, the government has not yet confirmed, even when questioned directly, if the credit notes would be covered by the same Atol protection that covers package holidays should a company go bust.”

Leave aside that Which? has confirmation of this from the Atol regulator in its own press release.

It goes on: “Which? is particularly concerned as some large holiday companies are forcing customers to accept refund credit notes and refusing cash refunds.”

This should not be happening – Which? is right about that. But which large holiday companies does it mean? Why not name them?

“The consumer champion” further notes: “Which? has repeatedly raised the question of whether RCNs are financially protected with both the government and the regulator.”

Well, not just Which? has done that – Abta has been doing it daily for the past three months. But it’s strange that Which? can’t acknowledge the Atol regulator’s response when it has it.

Rather, Which? asserts that “as it has not been given the necessary assurances . . . it is urging those with cancelled holidays not to accept [an RCN] and to instead push for a cash refund or rebook their holiday”.

It goes on to advise: “If you have already accepted a RCN but your holiday provider did not make clear the terms of accepting it at the time – for example, if it would require a signature from a solicitor who may charge a fee should the provider go bust – you should go back to your holiday provider and ask to exchange the RCN for a cash refund.

“It could be argued that the terms upon which the RCN was accepted were not fully and fairly disclosed . . . and so were misleading.”

Which? Travel editor Rory Boland tempered the injunction to consumers somewhat, saying: “The government must urgently confirm whether refund credit notes are Atol protected and step in with support for the industry.”

But he urged: “In the meantime, customers should continue to refuse refund credit notes.”

Until the government publicly backs refund credit notes, Boland suggested: “We are urging anyone who has had a holiday cancelled not to accept one and to keep insisting on the cash refund they are legally entitled to.”

The Air Travel Trust payment policy is clear

Were the Which? line to be taken up wholesale by consumers, it would almost certainly lead to businesses failing and to consumers who did not immediately seek cash payments having to wait longer to be reimbursed while the government sorts out financing.

In the circumstances, the exhortation could be deemed irresponsible.

Which? is right that Abta has insisted refund credit notes are protected. But it is not alone in this belief. The Confederation of Passenger Transport (CPT) and Association of Bonded Travel Organisers Trust (ABTOT) have insisted the same.

Leading industry accountant and Atol advisor Chris Photi of White Hart Associates told Travel Weekly: “The Air Travel Trust [ATT] payment policy is clear – refunds and refund credit notes are protected by the Atol scheme.”

The relevant clause of that payment policy states: “The ATT may make a payment to a consumer who was promised, but did not receive, a full or partial refund from the failed Atol holder.”

The policy provides that the ATT “may” make a payment “subject to the consumer providing satisfactory evidence to show that a refund is due [and] confirmation that the sum remains outstanding” in the kind of circumstances referred to.

It’s curious that MPs on the transport select committee, surely subject to considerable feedback from constituents on the issue of refunds, took a somewhat different tack to Which? in their report also published on Saturday.

The committee’s report on The impact of the coronavirus pandemic on the aviation sector notes of refund credit notes: “If the original booking was protected under the Atol scheme, the refund credit note should provide the same protection.”

It quotes Abta chief executive Mark Tanzer’s evidence to the committee that: “We had verbal confirmation [from the CAA] that the existing terms of the Atol scheme cover Refund Credit Notes . . . It is really important the CAA comes out and says that explicitly. We believe it is the case. Legal advice says it is the case.”

The report also notes Abta’s warning that “if people lose confidence in Refund Credit Notes and everybody drives for cash now . . . you will see a lot of travel companies fail”.

The MPs conclude: “The government should provide reassurance to passengers by setting out clearly the circumstances under which a Refund Credit Note . . . is protected by the Atol scheme.”

In addition, they record “some sympathy with the view that the legal time limits for refunds should have been extended in the current circumstances, as occurred in some EU countries”. They argue the government “should clarify why an extension to the legal deadlines for issuing refunds was not implemented in the UK” when it responds to the report.

An extension to the legal time limit for refunds is something Which? has opposed throughout, of course.

Refund credit notes remain key when quarantine lifts

To recap, Which? is urging consumers to reject refund credit notes and, where they have been accepted, to go back and demand a refund.

It is doing so on the basis of partial truths while asserting, with little more than superficial evidence, that a large section of the industry has misled the public.

One might conclude Saturday’s story was intended to alarm. It could be construed as self-serving.

Fortunately, most consumers do not appear to dance to Which?’s tune. Estimates of the take-up of refund credit notes vary but, together with rebookings, consistently come in at around 50%-60% of cancellations.

The refunds issue remains important, notwithstanding the fact that some outbound travel should resume from July if, as seems likely, blanket quarantine restrictions are lifted in late June.

First, any travel is almost certain to be limited to the EU. Second, many consumers may still choose not to travel on safety grounds or because they judge the holiday experience unlikely to be as anticipated pre-Covid-19.

Third, destinations that are open may be subject to re-imposed restrictions at any time, as may a UK departure point or region.

So acceptance of refund credit notes in lieu of rebooking – with the option of a cash refund – remains key to many firms’ survival.

Which? risks not helping anyone in these circumstances, including consumers.

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