ACTA Calling For Ontario Travel Industry Act Overhaul
In providing feedback on TICO’s Funding Framework and Fee Review Proposals, ACTA says that it’s time to “finally fix this 40-year-old legislation and its regulations which in no way reflect the environment of the Ontario travel industry.”
ACTA provided its feedback in an effort to assist Ontario travel registrants participating in consultations with TICO on the proposals.
Wendy Paradis, president of ACTA, observed: “Overall, we find TICO’s proposals to be essentially cosmetic changes. These are band aids on a broken system. 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.”
Paradis continued: “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.”
In offering its feedback, ACTA pointed out that, today, over 95% of transactions are using credit cards, which historically provides the primary consumer protection. The risk lies with several possible parties:
- Registrants that accept cash or cheque
- Unregulated tour operators
- Federally regulated airlines and cruise lines residing outside Canada
ACTA also says that Compensation Fund contributions should be paid for by the beneficiaries of the Fund — consumers. Any registrant fees should be based on the risk profile and not a blanket approach.
Addressing TICO’s proposals, ACTA said that it is important to evaluate TICO registrant fees and Compensation Fund contributions together.
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.
In order for ACTA to understand this impact further, ACTA encourages Ontario travel agencies and host agencies to use TICO’s fee estimate calculator, and advise ACTA of the results at [email protected].
Individual results shared will remain confidential, with only aggregate information being used in our advocacy message.
ACTA also said that 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.
The association said that, 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, ACTA said it estimates that TICO will still take $1 million a year from the Fund to cover expenses.
ACTA said that 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.
In its statement, the association said that 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.
The association also noted that 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.
ACTA said that 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.
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.