Research by YouGov on behalf of On the Beach reveals 851,000 holidaymakers are holding refund credit notes (RCNs) worth £781.5 million.

YouGov says 8.1 million people had a package holiday cancelled because of COVID, with only half receiving a full refund and almost 11% accepting an RCN rather than cash.

Despite the legal requirement to do so, 43% weren’t offered the option of a cash refund when their holiday was cancelled.

More than a million people with an RCN or rebooking were not offered a cash refund at the point of cancellation and 52% of consumers surveyed were unaware of their legal right to cash.

On the Beach Chief Executive Simon Cooper said the industry needed to restore trust and pay back the money.

He said: “The knock-on impact of refunds on consumer confidence continues to affect the industry.

“Even now, only a third of people say they would consider booking a holiday to a green list destination, so we have to do something to restore their confidence. Without it the industry will continue to be in trouble.

“There are millions of people still holding these IOUs, in some cases over a year later with very limited opportunity to go on holiday.

“This is all because some travel companies actively avoided offering cash and used their customers’ money for future holidays as cash flow.

“No-one would expect to receive a loan for this long and pay no interest, so why should these companies continue to hold onto their customers’ money for future holidays?

“To begin regaining consumer confidence and trust in the industry, we want those people with refund credit notes from 2020 to be refunded in full, in cash, now.”

He added regulators should enforce holiday companies and airlines to hold customers’ money in seperate regulated trust accounts.

The research was carried out among 6,434 consumers between February and April.