Value-for-money audit takes Ministry, TICO to task

In its overall conclusions to its just released and long awaited Value-for-Money Audit of the Travel Industry Council of Ontario (TICO), the Office of the Auditor General of Ontario (OAGO) writes: “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.”

As an example, the OAGO pointed to the fact that TICO “could not demonstrate that it effectively discharged its responsibilities under the Act to mediate and resolve complaints because it does not track the outcomes of the complaints it handles, including whether they were resolved or potentially violated the Act and its regulation, and whether they were referred for further investigation or enforcement action.”

Oversight, enforcement not always risk based

And the OAGO continued: “In addition, we found that TICO’s oversight and enforcement activities were not always risk-based. Specifically, TICO had not assigned a risk rating to 37% of its registrants, and it had not established guidelines for how a registrant’s risk rating should be used to drive TICO’s compliance and enforcement activities.”

The OAGO stated that: “We also found that TICO was not in alignment with key provisions of the Act and its regulation. The regulator could not demonstrate the justification for holding as much as $2 million in security deposits from registrants who may be eligible to have their deposits returned. On average, these deposits had been held by TICO for approximately seven years.”

In this respect, the OAGO audit pointed out that: “Under the Act’s regulation, once the registrant has filed two consecutive financial statements with TICO, if TICO’s Registrar has no concerns regarding the registrant’s compliance with the Act or its regulation, TICO is obligated to repay the security deposit to the registrant. Further, although the Act and its regulation allow only reasonable expenses that are related to the Compensation Fund to be paid from the Fund, we estimated that since 1997, TICO used over $31 million from the Fund to cover its own operating costs.”

Ministry oversight processes not fully effective

The OAGO states that: “Our audit also concluded that TICO was not fully effective in publicly reporting on its administration of the Act. For example, TICO does not include detailed compliance and enforcement information relating to registrants on its public directory, such as violations of the Act or details of enforcement action taken by TICO so that consumers can make more informed decisions about the travel agents they do business with.”

“Finally,” the OAGO writes: “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.”

The OAGO’s report contains a total of 16 recommendations, with nine of those directed at TICO, six directed at both TICO and the Ministry of Public and Business Service Delivery (MPBSD) and one directed at MPBSD.

The OAGO’s Value-for-Money Audit of TICO includes 16 recommendations and 32 action items and the full report is available by clicking here.

TICO responds

In response to the OAGO’s Value-for-Money Audit, TICO said that the report identifies opportunities for TICO to enhance its operations in administrating the Travel Industry Act, 2002, while also considering the significant changes that have occurred in Ontario’s travel marketplace.

TICO’s CEO, Richard Smart said: “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.”

Smart continues: “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.”

TICO indicated that it 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 its response, TICO noted that the report also underpins the transformational changes that have occurred in the travel marketplace since TICO was created 26 years ago, including the way consumers purchase travel and the evolution of how travel businesses operate.

It also indicated that it 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.

TICO will provide its implementation plan to the Minister of Public and Business Service Delivery in early 2024. TICO will also report on its progress to address the recommendations through a Public Action Plan, which will be posted on TICO’s website.