In order to assist Ontario travel registrants participating in TICO consultations, ACTA has provided feedback on the Funding Framework and Fee Review Proposals.
On 05OCT 2023, Open Jaw reported that TICO unveiled recommendations to revamp its funding framework. TICO said the proposals offer a balanced approach to meet the needs of both consumers and the industry.
At the time, TICO stated that the proposal reflected its "commitment to develop a fair and modern funding model that reflects cost recovery, delivers value to stakeholders during this time of industry renewal, and continues to keep consumer protection at the forefront."
ACTA is calling for a complete overhaul of the Ontario Travel Industry Act.
"Overall, we find TICO's proposals to be essentially cosmetic changes," said ACTA President Wendy Paradis.
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TICO's five key proposals are as follows:
Compensation Fund:
- Decrease Compensation Fund payments to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales.
- Remove non-contributing end-supplier coverage (airlines and cruise lines) from the Compensation Fund, subject to government consideration and decision-making.
- Double the maximum Compensation Fund payment per person to $10,000 from $5,000 for consumers, subject to government consideration and decision-making.
Registration Renewal Fees:
- Recalibrate registrant renewal fees with modernized and more equitable fee bands.
Other:
- Institute new late filing fees to encourage timely submission of required documentation and ensure efficient processing.
"These are band aids on a broken system," said Paradis. "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."
She added: "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."
Today, over 95 percent of transactions involve credit cards, historically providing 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 further stated that "Compensation Fund contributions should be paid for by the beneficiaries of the Fund –consumers. Registrant fees should be based on the risk profile, not a blanket approach."
TICO's Proposals
"It is important to evaluate TICO registrant fees and Compensation Fund contributions together," stated ACTA.
"The reduction in variable Compensation Fund fees is directly offset by permanent increases in registration fees based on sales volume and an increase in the fixed minimum registration fee."
To understand the impact, ACTA encourages Ontario travel agencies and host agencies to use TICO's fee estimate calculator and advise ACTA of the results at advocacy@acta.ca.
Individual results shared will remain confidential, with only aggregate information used in its advocacy message.
TICO must reduce operating costs to the Fund
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.
According to ACTA, approximately 72 percent of TICO operation expenses are funded through the Compensation Fund --an average of almost CAD $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 estimates that TICO will still take CAD 1 million a year from the Fund to cover expenses.
End Supplier coverage ending
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.
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.
Maximum claim from $5k to $10k still inadequate
While increasing the maximum Compensation Fund payment per person to CAD 10,000 from CAD$5,000 for consumers on the surface is an improvement, the remaining caps of CAD$5M/event and CAD$2M in repatriation would leave consumers with "cents on the dollar" in the event of a large failure.
TICO, the payor of last resort
"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," ACTA explained.
Suppose the Ontario government remains motivated to legislate enhanced consumer protection to make the consumer "whole" in case of potential registrant bankruptcies or insolvencies. In that case, this is only sustainable through a consumer contribution model.
As Open Jaw reported, TICO invited registrants and stakeholders to participate in the consultation process actively:
- Share feedback via an online survey by 10NOV 2023.
- Join a virtual or in-person focus group. Sessions are scheduled throughout OCT and early NOV in multiple locations, including Mississauga, Ottawa, and Waterloo. Virtual sessions are also organized for broader participation.
Key Dates:
- 05OCT 2023: Proposal announcement kicked off the consultation period.
- 10NOV 2023: End of the consultation period.
- 01APR 2024: Targeted implementation date for specific proposed changes.
After the 05OCT announcement, TICO’s Richard Smart took questions from Open Jaw's President Nina Slawek about high expenses, the rift with ACTA and why a consumer-funded model is not on the table.
ACTA believes that more profound systemic change is imperative. The current proposals lean heavily on Ontario travel agencies and tour operators without addressing the crucial need for consumer contributions or reflecting the contemporary dynamics of the Ontario Travel Industry.
As the industry navigates a pivotal moment of transformation, it is paramount for all stakeholders to advocate for a more equitable and modernized system that genuinely protects consumers without unduly burdening registrants.
ACTA urges the Ontario government to reconsider the Funding Framework and Fee Review Proposals, listening closely to industry feedback and moving towards a solution that will sustain the industry for decades to come.
More information on ACTA's website.
