‘BAND AIDS ON A BROKEN SYSTEM’: ACTA calls for Travel Industry Act overhaul

After considering TICO’s review for a new funding framework and fees, ACTA says it believes the resulting proposals from the Ontario regulating body to be “band aids” that do little to change a “broken system” for registrants in the province.

“Overall, we find TICO’s proposals to be essentially cosmetic changes,” says ACTA president Wendy Paradis. “The proposed funding framework is not based on the risk profile of the registrant, and the consumer is not legislated to contribute, leaving the burden squarely on the shoulders of Ontario travel agencies and tour operators.”

She adds: “The window to change the system is open now and it could be years before it is opened again. ACTA, our members, and other industry associations need to continue to advocate to the Ontario government to finally fix this 40-year-old legislation and its regulations, which in no way reflect the environment of the Ontario travel industry today.”

ACTA says that today over 95% of transactions are using credit cards, which historically provide protection for the primary consumer protection. However, it adds, risk lies with several possible parties:

• Registrants that accept cash or cheque
• Unregulated tour operators
• Federally regulated airlines and cruise lines residing outside Canada

As such, ACTA says Compensation Fund contributions should be paid for by the beneficiaries of the Fund – consumers – and that any registrant fees should be based on the risk profile and not a blanket approach.

“It is important to evaluate TICO registrant fees and Compensation Fund contributions together,” says ACTA. “The reduction in variable Compensation Fund fees is directly offset by permanent increases in registration fees based on sales volume, along with an increase in the fixed minimum registration fee.

Send your new fees info to ACTA

In order for ACTA to understand this impact further, ACTA is encouraging Ontario travel agencies and host agencies to use TICO’s fee estimate calculator, and advise ACTA of the results at advocacy@acta.ca.

Individual results shared will remain confidential, with only aggregate information being used in the association’s advocacy message.

Among ACTA’s claims and demands (verbatim):

• TICO cost reductions: Since the TICO Report recommends a significant reduction in the Compensation Fund and no consumer contribution, the Ontario government must review all TICO expenses and what the Fund will cover in the future. Currently, approximately 72% of TICO operation expenses are funded through the Compensation Fund – an average of almost $3M/year over 2016-2020. Without a significant reduction in the cost of TICO operations and expenses, this is not sustainable going forward. Even under the new proposal, we estimate that TICO will still take $1 million a year from the Fund to cover expenses.

• End Supplier coverage ending: The proposed removal of coverage of cruise lines and airlines – both non-contributing end-suppliers – is a positive step toward change. This is a national issue, not a provincial issue. It is important to note that Section 46 of the Travel Industry Act Regulations still states that if a registrant acquires rights to travel services for resale, and the supplier fails to provide the travel services paid for by a customer, the registrant is still liable and therefore, ACTA believes this section of the regulations must be updated with more equitable wording.

• Maximum claim from $5k to $10k still inadequate: While increasing the maximum Compensation Fund payment per person to $10,000 from $5,000 for consumers on the surface is an improvement but the remaining caps of $5M/event and $2M in repatriation would leave consumers with “cents on the dollar” in the event of a large failure.

• TICO the payor of last resort: It is also important to keep in mind that TICO is the payor of last resort with registrants being the first to reimburse, followed by credit card companies, and then insurance policies before claims ever hit the Ontario Compensation Fund.

In conclusion ACTA says, “If the Ontario government remains motivated to legislate enhanced consumer protection to make the consumer ‘whole’ in the event of potential registrant bankruptcies or insolvencies, the only way this is sustainable is through a consumer contribution model.”

TICO

TICO is currently seeking input to its proposals with various in person and zoom events continuing through Nov. 7, and organization CEO Richard Smart recently told reporters that a “course correction” is an entirely possible if its proposals to the ministry garner significant disapproval.

For TICO’s take on its proposals, see: