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CMA calls on holiday industry to give customers clearer Ts & Cs

Posted 17/04/19

The Competition and Markets Authority (CMA) has launched a new campaign to help holiday and travel businesses improve the clarity of their terms and conditions.

The ‘Small Print, Big Difference’ campaign is being run in partnership with the lead associations representing the holiday and travel industry, including ABTA – The Travel Association, UKHospitality and the Specialist Travel Association (AITO) amongst others.

As holidaymakers get ready to make the most of the Easter break, the CMA’s campaign is calling on holiday and travel businesses to ‘check in’ and make sure they are using fair terms and conditions in their customer contracts. It also encourages businesses to be upfront and clear with their customers about charges and fees, especially in the event of a customer cancellation.

Holidays can be an expensive outgoing with people in the UK spending an estimated £81 billion on them at home and abroad in the 12 months to April 2018. However, some holidaymakers may have to cancel their plans due to changes in circumstances such as an illness or death in the family.

Under consumer law, businesses may be entitled to ask customers to pay a cancellation fee to cover their losses, but the amount they keep must be in proportion to what they are losing. Cancellation terms that don’t follow this approach are likely to be unfair and businesses can’t rely on them to resolve claims or disputes with customers. 

A national survey of 2,000 people by Ipsos Mori, released by the CMA today, shows what members of the public feel should happen if they have to cancel a trip:

  • 89% felt they should get all, or most, of their money back if they cancel and the business re-sells their booking
  • 85% felt that it’s unfair if they have to pay part of the cost of a booking when they cancel
  • 66% felt that travel and holiday businesses do not always make it as easy to cancel a booking as they should
  • Of those with experience of cancelling a booking, 1 in 5 felt that they had been treated unfairly 

A term can be legally unfair if it gives the business an unfair advantage. Examples of unfair terms can include those which allow a business to take a large, upfront deposit and refuse to refund any of the customer’s money if they cancel, regardless of the amount the business is losing or the reason for the customer cancelling.

Another example is when a business insists on a large cancellation fee which bears no relation to the actual losses it experiences from the cancellation. A term is more likely to be fair if it clearly explains how a charge reflects what a business will genuinely lose from a cancellation, and the way this charge is calculated is reasonable.

Paul Latham, the CMA’s Director of Strategy and Communications, said:

“Nobody wants to cancel a trip or holiday, but if you have to, it’s important that you are treated fairly and don’t lose out more than is absolutely necessary.”

“Our campaign is asking travel businesses to ‘check in’ on their terms to make sure they’re fair. Fair terms are a legal requirement as well as helping reassure customers that they’re dealing with a company they can trust. 

“Unfair terms can’t be enforced so they also won’t protect businesses if challenged. The small print really can make a big difference.” 

Mark Tanzer, Chief Executive of ABTA, said:

“At ABTA, we recognise the importance of customers feeling confident that they are buying from a business that commits to treating them fairly. ABTA has discussed its model terms and conditions with the CMA, and along with the ABTA Code of Conduct, I am confident they provide our Members with a strong framework to ensure they are compliant with the regulations and are fair for customers.

“There are circumstances when a cancellation charge may apply, but it must genuinely reflect the costs of cancellations faced by the travel company. We always encourage people to take out travel insurance as soon as they book their holiday, which should protect them from the costs for most cancellations.” 

Kate Nicholls, Chief Executive of UKHospitality, said:

“The CMA’s campaign has followed legislation aimed at providing crucial accuracy and transparency for both businesses and customers. It is vitally important that our customers have full confidence when they make a booking with a hotel, a restaurant, a B&B or any other hospitality business.

“A clear understanding of terms and conditions can help foster an open and responsive relationship that gives our customers peace of mind and boosts businesses.” 

Derek Moore, Chairman of AITO, said:

“AITO - The Specialist Travel Association welcomes the CMA’s timely reminder to its members to make sure that their booking conditions are fit for purpose and fair to the consumer. With the myriad of travel organisers, many from outside the UK and EU, targeting UK consumers, understandable and transparent conditions have never been more important”.

The CMA’s campaign invites businesses to ‘check-in’ on their terms to make sure they’re being fair to their customers, by using the CMA’s advice to help them review their contracts.  A new website (www.gov.uk/fairterms) contains accessible advice and information for businesses on unfair contract terms law and what they can look for when reviewing their terms and conditions. In addition, the CMA has produced detailed guidance to help businesses and their legal teams understand how to apply the law. 

Notes:

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For CMA updates, follow us on Twitter, @CMAgovuk, Facebookand LinkedIn.
  2. The Consumer Rights Act 2015, in force from 1 October 2015, contains provisions that aim to protect consumers against unfair contract terms and notices. It applies to wording that lays down the rights and responsibilities of consumers and businesses when entering into agreements with each other. It also applies to consumer notices (often used, for instance, in shops and car parks as well as online).

3.    A consumer can challenge an unfair term and seek redress through the courts, if unsatisfied with the business’s response after following its complaints procedures. The CMA, Trading Standards Services and other relevant bodies also have powers to pursue legal action to stop businesses using terms and notices that are unfair. If necessary, this can be achieved by seeking a court order.

  1. Consumers who have experienced a problem with a business can get advice from the Citizens Advice consumer service on 03454 040506 or 03454 040505 for Welsh language speakers. Consumers can also report an issue to their local Trading Standards Office.
  2. Ipsos MORI carried out an online omnibus survey of UK 2,260 consumers aged 16-75 between Tuesday 20th and Friday 23rd November 2018.
  3. The Office for National Statistics publish data on family spending in the UK. A figure of £80,964,000,000 for holiday spending from April 2017 to the end of March 2018 is derived from different datasets covering family spending on air fares, package holidays, other holiday spending and accommodation services. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearending2018
  4. Media queries should be directed to press@cma.gov.uk, on 020 3738 6460.


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