“Enough is enough”: CATO’s frustration clear in statement calling for consumer-pay model for Comp Fund

“Enough is enough”: CATO’s frustration clear in statement calling for consumer-pay model for Comp Fund

TORONTO — The Canadian Association of Tour Operators (CATO) is stepping up its calls for a consumer-pay model for the Ontario travel industry’s Compensation Fund.

Says Brett Walker, CATO Chair: “It’s time for consumer protection that’s commensurate to consumer risk and without all the caps and gaps. It’s time for government and TICO to get this right and to provide consumers the protection they deserve and no doubt believe they have when booking with an Ontario registrant.”

Ultimately, any changes to the Travel Industry Act are up to the provincial government. CATO and also ACTA have long advocated for changes to the Comp Fund, frustrated with the stalemate. ACTA and then CATO spoke out in January 2020 after the Ontario government, in December 2019, signaled that there was no intention to revise the Comp Fund’s model. Both CATO and ACTA say they have mounted lengthy and costly joint lobbying efforts for Comp Fund reform. CATO and ACTA spoke out again about the Comp Fund in June 2021, in the midst of the pandemic.

In September 2022 TICO announced the start of a process that includes an end-to-end look at TICO’s current funding framework, as well as a full review of the Comp Fund. As TICO President and CEO Richard Smart put it, “all options are on the table”, including a model that integrates a consumer-pay component, a risk-based model, or even no fund at all.

The idea of a consumer-pay model, like the one in Quebec’s travel industry, has been a topic of discussion in the Ontario travel industry for years. “If I had a nickel for every time someone suggests a consumer-pay model like Quebec has, I’d be sitting on a beach somewhere right now,” said Smart at TICO’s fall 2022 update. TICO has retained a consultancy for the review process and wants to have a final set of recommendations ready for the provincial government by early this year. The goal is to have a new funding model in place by fall 2023. In September 2022 the Fund was $23.5 million.


Yesterday CATO released a statement outlining its position. “This statement is on behalf of all CATO members and supported by all CATO members. The importance of both its clarity and release now is the growing gap between actual consumer protection and the reality based on multiple factors,” says Walker.

Here is CATO’s statement in its entirety…

“We believe the consumer Compensation Fund should, at a minimum, be co-funded by consumers.

“A consumer contribution is the only means to grow the Compensation Fund sufficiently to account for current realities and to ensure consumers are fully protected, without any caps, in the event of a registrant failure.

“A consumer contribution is also the surest way to heighten awareness of the Fund’s consumer protection and the importance of booking with a TICO registrant.

“In an actuarial review five years ago, commissioned by TICO and performed by Deloitte, it was determined the target Fund size should be between $50M –60M. However, the review noted that even a Fund this size still required the retention of consumer and per event caps on claims, as well as not accounting for any large registrant failures or catastrophic losses. The current Fund is roughly half the amount of the minimum target Fund size suggested by Deloitte back in 2018.

“Not only is the size of the Fund wholly inadequate, consumers should not be victims of the imposed caps on claims. Set decades ago, these caps were never indexed and the rapid rate of inflation exposes consumers to ever increasing risk.

“Further hampering any claims by consumers is that the Fund is restricted to being the payer of last resort. Not only does this subject consumers to an exhausting claims process prior to ever making a legitimate claim against the Fund, such subrogation of responsibilities exposes registrants to higher costs to banks and other payment processors as well as having to pay into the Fund; hardly creating a competitive landscape for tour operators and other travel businesses in Ontario.

“Currently, funding of the Compensation Fund is through each Registrant’s annual Compensation Fund Remittance (Form 1) filing. In addition to this, each Registrant is required to pay an annual registration/ renewal fee of between $300 -$1,800 for each Head Office (in accordance to sales volume) and $300 for each Branch Office.

“Exacerbating the funding of the fund is that TICO also draws from the Fund for certain operating expenses related to the Fund, thus depleting the fund and further reducing the extent to which consumers are protected by the Fund.

“Though TICO has engaged a consultant to complete a comprehensive review of all fees, with expected recommendations later this year, such engagements in the past have produced little if any results.

“Enough is enough. Consumers and registrants deserve a consumer protection fund commensurate to consumer risk. This can only be achieved through a funding model that includes a consumer contribution as well as minimizing any caps and gaps that expose consumers to losses. The current fund is wholly inadequate and the status quo is simply unacceptable.”

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