The cost of maintaining the Travel Industry Council of Ontario (TICO) may outweigh the provincial regulator’s benefits to consumers, says Ontario’s auditor general in it’s just-released “value for money” audit. The wide-ranging report extensively, though not exclusively, examined the province’s tourism sector (including government), providing third-party observations and suggested “actions.”

Noting significant changes in the travel industry since TICO went into effect in 1997, the Office of the Auditor General of Ontario (OAGO) said “TICO’s structure and responsibilities have remained largely unchanged.”

To that end, the report includes 16 travel-related points – nine of them directed at TICO, six directed at both TICO and the Ministry of Public and Business Service Delivery (MPBSD), and one directed at MPBSD, as well as suggested 32 actions.

Most notably, OAGO questioned whether consumers are getting their money’s worth from TICO, which is self-funded (through contributions from provincial registrants based on volume of business).

“Over the 10 years from 2013/14 to 2022/23, TICO’s registrants booked over $133 billion in travel services for consumers,” stated the report. “Over this same period, we found that, on average, the Fund paid approximately $350,000 in compensation to consumers annually, or less than 0.003% of annual travel services booked by TICO’s registrants. TICO’s estimated annual cost for 2022/23 to administer the Fund of $1 million is nearly three times more than the $350,000 in compensation paid from the Fund to consumers on average over the last 10 years.”

Other TICO-specific comments included:

• TICO could not demonstrate the justification for holding as much as $2 million in security deposits from registrants.
• TICO’s registrant risk rating system was not used to effectively oversee registrants.
• 30% of TICO registrants had not received a compliance inspection in the last 10 years.
• The Ministry and TICO have not established a disciplinary process for registrants.
• TICO has used an estimated $31.3 million from the Compensation Fund since 1997 to cover its own operating costs.
• TICO had been unable to address gaps in key competencies among Board members.
• The Ministry did not collect sufficient information to monitor and assess TICO’s performance in meeting its mandate.
• Almost half of Ontarians surveyed who were involved in travel planning for their household were unaware of TICO.
• TICO did not know whether complaints involving violations of the Act were referred for enforcement action.
• The Ministry did not collect sufficient information to monitor and assess TICO’s performance in meeting its mandate.

In conclusion, OAGO stated: “Our audit concluded that TICO did not have processes to consistently administer the Travel Industry Act, 2002 effectively in order to register and regulate travel agents and wholesalers, and to protect consumers when purchasing travel services through a travel agent or wholesaler.”

The auditor noted that it compared TICO to travel regulators with similar regulatory requirements and found that other jurisdictions “utilized consumer protection organizations or broader government organizations whose mandate included significantly more than just regulating sellers of travel.

“We also found that the majority of Canadian provinces and most US states do not have travel regulators or specific travel seller regulations at all. As well, we found that the Australian government repealed the country’s travel seller regulations in 2014 because it determined that due to changes in the travel industry and other existing consumer protections, they were no longer necessary…”

But if TICO was found wanting, the auditor was also quick to apportion blame to the provincial ministry that oversees it.

“Our audit concluded that the Ministry’s oversight processes to ensure that TICO effectively administers the Act and fulfils its mandate were not fully effective. For example, we found that performance indicators had not been established, or were insufficient, to monitor TICO’s operational performance in several key areas where our audit identified operational issues, including in the areas of inspections, security deposits, and complaint-handling. In addition, the Ministry had not reviewed whether TICO’s structure and assigned responsibilities as a regulator were an efficient and cost-effective way to administer and enforce the Act.”

TICO CEO Richard Smart responded in statement: “TICO values the objective third-party perspective that this review has provided and the opportunities to enhance the way we deliver on our consumer protection mandate. Our team is dedicated to addressing the recommendations presented in the report, a number of which are already in progress. We are committed to being transparent and accountable as we share our action plan in the months ahead.”

Smart says TICO will enhance its policies and procedures, risk-based decision-making processes and its collection and analysis of data to improve business intelligence of the travel marketplace and the businesses it regulates.

In a letter sent to TICO registrants, Smart said: “The purpose of the OAGO value-for-money audit is to find things that aren’t working as well as they should be. At TICO, we are using the recommendations as an opportunity to enhance administrative and procedural items where we can do better, and we are eager to make those enhancements.”

He adds that TICO is “committed to working collaboratively with MPBSD as it considers potential regulatory changes and what the future of consumer protection should look like in the years ahead” and will provide its implementation plan to the Minister of Public and Business Service Delivery in early 2024.

It will also report on its progress to address the recommendations through a Public Action Plan, which will be posted on TICO’s website.

In response to the report, ACTA stated: “The 51-page report is comprehensive and clearly reflects the fact that the Travel Industry Act and current oversight of the industry do not properly reflect the environment of today’s travel industry. ACTA has been advocating for a thorough review and rewrite of the Travel Industry Act and that consumers and industry deserve much more than band aids on a broken system.

“ACTA and our Ontario Travel Agency Advocacy Committee is pleased that many of our concerns and recommendation were listened to,” adding it would issue further comment after deeper analysis.

For a full review of the OAGO value for money audit, click HERE.