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Not Just Any Financial Protection Will Do

The Government is coming under increasing pressure to legislate against ‘forum shopping’ by non-UK based travel companies selling to UK consumers, who are looking to apply less stringent forms of financial protection for their bookings than as apply in the UK.

The pressure has been prompted mainly by the collapse of Lowcost Holidays, a UK company that relocated to Majorca in 2013, withdrawing from the ATOL scheme to save money. The company left 27,000 customers overseas and 112,000 forward bookings many of which were not adequately financially protected because the company, in line with Majorcan law, only had the benefit of a bond a fraction of the size of its £500 million annual turnover.

The new EU Directive on Package Travel which is due to be implemented into UK law in January 2018, positively encourages businesses to look for the lowest cost scheme of financial protection within Europe because of its reciprocal provisions relating to financial protection across Europe. As things stand at present, UK consumers booking with European companies would (quite legitimately and possibly without awareness) be booking holidays which only benefit from a fraction of the protection that they would receive under UK law.

Of course, any company that chooses to put consumer protection and care above money savings isn’t likely to take advantage of the current options for ‘forum shopping’. Indeed some companies may choose to go beyond even what is required under UK law in order to provide for its customers in the event of its financial failure. One must hope that the impact of the Lowcost Holidays failure does enough to raise the profile of consumer financial protection in the eye of UK holidaymakers enough to see good financial protection high on their list of priorities when booking a holiday.