ACTA sounds rallying cry in its fight for Comp Fund reform

ACTA members address key concerns of Travel Industry Act Review

TORONTO — In response to the ongoing Ontario Travel Industry Act (TIA), ACTA, which has been an active participant in the process, has addressed a number of key concerns from its members in its Phase 2 submission.

Now in Phase 3 of the Review, the Ontario government is seeking feedback from the public and travel industry stakeholders about the proposals for possible changes to TIA outlined in the Phase 2 report by July 24. The proposals may change depending on the feedback received, and are subject to the government and legislative decision-making processes.

The following is a summary of the key concerns raised by ACTA members:

1. Compensation Fund: Is it necessary, who should fund it, and how should it be based?

The Ontario government has proposed to maintain the Travel Industry Compensation Fund, and to enable the development of an expanded fund with the potential for contribution directly from consumers.

Based on member feedback, ACTA considers this a “win” that the government

is opening the door for a consumer-pay model. ACTA members were also open to expanding fund coverage if it were a user-pay model. Coverage of the fund is currently capped at $5 million per major event. This is not nearly enough to cover the insolvency of a major tour operator or airline, as an example, and consumers would not be compensated for all or any of their dollars spent. The only way to provide sufficient coverage of the fund in its current structure is to increase industry contributions, which is unsustainable and will force registrants out of the market, ultimately diminishing fund contributions. Should the Ontario Travel Industry Compensation Fund remain as an industry-funded model, then registrants should not

have to pay for, nor be liable for, end suppliers. In this case, coverage should only be for the bankruptcy or insolvency of a registrant.

The one item not addressed in the Ontario government report, but is of concern to some ACTA members, is the need to narrow the scope of the coverage of the Compensation Fund to Ontario consumers only. Currently, contributions to the Compensation Fund are based on “Sales in Ontario”, which includes: all travel sales to a consumer including taxes (except for GST/HST), that are invoiced to a consumer that include trips, accommodations and transportation, billed individually or in a package. While both leisure and corporate travel agencies raised the concern, corporate travel agencies with call centers in Ontario, in particular, expressed concern that a significant number of their clients are out-of-province and yet, contributions are being assessed on these sales. If the mandate of the Ontario government is to protect Ontario consumers, then the government should consider narrowing the scope to provide coverage to only Ontario consumers and not coverage to travellers all around the world simply because their travel was booked through an Ontario registrant.

2. Regulatory Burden: Review Engagements, Audits

ACTA’s Phase 2 submission stated that ACTA members strongly support an alternative to the costly review engagement and audited financial statements. In addition, if the Ontario 3 government legislated the continuation of the current financial reporting requirements, ACTA members strongly supported increasing the threshold or level of annual sales to a minimum of $20 million where audited financial statements would need to be submitted. ACTA pointed out that the level to which audited financial statements need to be submitted to TICO should be adjusted to take into consideration changes in the consumer price index over the last few decades.

The government has proposed to amend financial reporting to: Require small registrants to submit an internally prepared financial statement with an attestation form signed by a principal, director or designated officer of the business certifying that the information contained is true and correct; and adjust the financial thresholds for larger registrants to reflect inflation and market growth of the travel industry since these thresholds were established.

Based on member feedback, ACTA considers this a “win” that the government is eliminating the requirement of filing review engagements for registrants with sales under $2M. According to TICO, this represents 90% of the registrants. ACTA applauds the government for increasing the current audit level of $10M to $20M and considering our argument that adjustments needed to be made due to inflation over the last few decades.

3. Registration: Registering of Individuals

ACTA’s Phase 2 submission stated that the majority of ACTA members do not support the registration of individuals. The mixed response showed a clear divide between corporate ACTA members and small to medium leisure-based agencies. Corporate ACTA members stated that there is no benefit to the consumer in knowing the agent working in a corporate agency. In a corporate environment, often it is the client that is making their own booking using the corporate agency tools. The client may also work with a team of agents that are fulfilling the travel arrangements and not “selling” travel. Many of the larger companies noted that having to register or list individuals (in some cases based all over the world for global corporate agencies) would present a significant administrative burden. ACTA members that supported the idea of registering individuals associated with a travel agency, mostly small to medium leisure-based agencies, suggested that listing travel agents on the TICO website would help reduce fraudulent activities by rogue travel agents. ACTA members were clear to point out however, that there should not be any significant financial burden to the agency.

The government has proposed to amend the existing classes of registrants to create two new classes of registrants with differing requirements: travel seller (combining the two categories of travel agent and travel wholesaler) and travel counsellor (as the individual who is employed by the travel seller).

Based on member feedback, the ACTA response remains mixed. Large

corporate agency who often transact in a closed corporate environment question the benefit to their client. ACTA understands, however, that this is one change the Ontario government is focused on moving forward. To that end, ACTA will work with the policy makers to see if there is any middle ground within the regulations.

ACTA is encouraging the public to take the time to review the proposed changes. All feedback can be forwarded to Heather Craig-Peddie at hcraig-peddie@acta.ca by 5:00 p.m. EST Friday, July 21.