TORONTO — ACTA is calling for a complete overhaul of the Ontario Travel Industry Act, as part of its review of TICO’s funding framework and fee review proposals.

“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,” said ACTA president Wendy Paradis.

A one-month consultation period is currently underway for TICO’s five proposals. More details on the proposals, and dates for virtual and in-person consultation opportunities, plus a link for online feedback, on everything from the five proposals to a possible point-of-sale option where travel retailers and wholesalers could voluntarily pass on or display Comp Fund fees or registration renewal fees at the point of sale, can be found here.

Paradis said: “Overall, we find TICO’s proposals to be essentially cosmetic changes. These are band-aids on a broken system. 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.”

Paradis noted that over 95% of transactions in today’s environment are by credit cards, “which historically provides the primary consumer protection.” ACTA says the risk lies with several possible parties: registrants that accept cash or cheque; unregulated tour operators; and federally regulated airlines and cruise lines residing outside Canada.

ACTA’s stance is that Comp Fund contributions “should be paid for by the beneficiaries of the Fund – consumers. Any registrant fees should be based on the risk profile and not a blanket approach.”

ACTA and CATO, as well as retail groups and individual travel advisors, have been vocal for years about the need for updates to the Comp Fund model, and many have advocated for a consumer-pay model similar to that in Quebec.

TICO’s CEO Richard Smart spoke to the consumer-pay model at TICO’s Oct. 5 briefing. “In regards to Quebec’s consumer-pay model, I’ve always said that you can’t cherry-pick what you like and ignore what you don’t like [from other funding models]. Quebec has significantly more regulatory burden with their model. There would be a significant financial cost if we were going to replicate that. We’ve told ACTA and CATO, if you want a consumer-pay model, develop a proposal and take it to the government. When people say, ‘let’s do the Quebec consumer-pay model’, those are policies, those are decisions that the Ontario government makes.”

 ACTA LOOKS AT FEES

TICO’s five proposals include a decrease in Comp Fund payments; removing non-contributing end-supplier coverage from the Fund; higher Fund payout maximums; new late filing fees; and recalibrated registrant renewal fees. “Companies with more gross sales will pay more,” said Smart at the Oct. 5 briefing. “We’re trying to reduce the burden on smaller registrants.”

ACTA’s take is that TICO registrant fees and Comp Fund contributions need to be evaluated together. “In order for ACTA to understand this impact further, 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 being used in our advocacy message.”

NEED TO REDUCE OPERATING COSTS TO THE FUND: ACTA

ACTA also argues that since TICO is recommending a significant reduction in Comp Fund payments, and no consumer contribution,” the Ontario government must review all TICO expenses and what the Fund will cover in the future. Currently, approximately 72% of TICO operation expenses are funded through the Compensation Fund – an average of almost $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, we estimate that TICO will still take $1 million a year from the Fund to cover expenses.”

TICO’s stance is that the updated registrant fee bands will help to address TICO’s long-standing funding gap. The funding gap was one of four key reasons TICO launched the review.

END SUPPLIER COVERAGE ENDING: “A POSITIVE STEP”

ACTA’s take on 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.”

However, “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 INCREASE “STILL INADEQUATE”, SAYS ACTA

ACTA is also taking the position that while increasing the maximum Comp Fund payment per person to $10,000 from $5,000 for consumers is an improvement on the surface, “the remaining caps of $5M/event and $2M in repatriation would leave consumers with ‘cents on the dollar’ in the event of a large failure.”

TICO THE PAYER OF LAST RESORT

ACTA also had this to say: “It is also important to keep in mind that TICO is the payer 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. If the Ontario government remains motivated to legislate enhanced consumer protection to make the consumer ‘whole’ in the event of potential registrant bankruptcies or insolvencies, the only way this is sustainable is through a consumer contribution model.”