Travel companies have been warned that they must respect the refund rights of consumers ahead of the restart of package holidays next week.

The Competition & Markets Authority has written to 100 package travel firms that it has received the most complaints about to remind them of their legal obligations and of the need to make refund options ‘clear and accessible’.

At the same time, it has also secured formal commitments from TUI to provide clear information on refunds upfront to customers whose holidays have been cancelled due to COVID.

It says TUI had already taken steps to meet concerns raised by the CMA.

The authority says that, in total, it has received more than 23,000 complaints from holidaymakers whose packages were cancelled due to the pandemic.

In an open letter published today, and sent to 100 travel companies, the CMA said:

• Customers must be refunded with 14 days of a package holiday cancellation, even if the organiser is still waiting for airline/hotel refunds
• Clients must be able to cash in credit notes at any time
• Customers should be refunded if they cancel due to ‘unavoidable and extraordinary circumstances’ at the destination
• Refunds are likely to be due if holidaymakers choose not to travel against Foreign Office advice
• It is a criminal offence to advertise ‘refund guarantees’ unless they go beyond an operator’s legal obligations

Crucially, the CMA made it clear that customers should be fully refunded if they choose to cancel a package because ‘unavoidable and extraordinary circumstances at the destination significantly affect the holiday they have booked or their travel there’.

It said that this included customer cancellations when the Foreign Office advises against non-essential travel, adding: “That is, in the CMA’s view, strong evidence that these unavoidable and extraordinary circumstances are likely to apply. 

“If the consumer is refused a full refund, the package holiday company should fully explain why it disagrees that the holiday or travel is significantly affected.”

In the CMA’s view, the mere fact that the flight is still operating, and the accommodation is open is not, in and of itself, a sufficient basis to deny a consumer a full refund – CMA Director, Consumer Group Hayley Fletcher

The CMA has also warned organisers that they will be breaking the law if they delay refunding customers until they they’ve been refunded by airlines or hotels. “The fact that an organiser has not itself been refunded by third parties does not in any way relieve organisers of their duties under the PTRs (Package Travel Regulations).

“It is organisers that are legally obliged to refund consumers in these situations, irrespective of whether funds are first received back from third party service providers,” said Ms Fletcher.

Additionally, the CMA warned operators that it is a criminal offence to advertise ‘refund guarantees’ unless these go beyond their legal obligations.

“In our view, presenting a consumer’s statutory right to a refund within 14 days as part of a formal ‘guarantee’ offered by the organiser to consumers is likely to be a ‘banned practice’ and therefore contrary to consumer law,” it said.

“We would expect any ‘refund guarantees’ set out in an organiser’s communications with consumers to be confined to only those distinctive features offered by the organiser which go beyond the consumer’s statutory rights.

“Organisers should not try to badge any aspect of consumers’ refund rights provided under the PTRs as a distinct feature of their offer.”

CMA Chief Executive Andrea Coscelli added: “International travel is set to resume soon and lots of people will be considering a long-awaited trip abroad. With that in mind, we want to make sure people are fully aware of their refund rights, so they can make informed choices about booking a holiday.

“We expect all firms to give clear cancellation options and will consider appropriate steps if we see companies breaking the law by refusing or delaying refunds this summer.”

The CMA has already taken action against five major travel companies and secured refunds of more than £  200m for consumers. Currently, it is considering legal action against Teletext for delays refunding more than £7m to its customers.

You can read the full letter here.