UK competition watchdog investigates holiday firms over refunds

The UK competition watchdog is investigating package holiday firms after receiving thousands of complaints from consumers who have been unable to recoup money on cancelled breaks.

The Competition and Markets Authority said it had received 60,000 complaints related to the coronavirus crisis, including difficulties getting money back and price rises.

Holiday firms and airlines were the subject of almost 27,000 of the complaints, and those businesses accounted for three-quarters of the submissions involving cancellations and refunds.

The CMA said package holiday firms would be added to the list of businesses its Covid-19 taskforce was investigating. It said it had concerns about firms that refused refunds, made it difficult for consumers to obtain refunds, or insisted that consumers rebook or accept vouchers.

If firms were found not to be complying with the law, they could be taken to court, the CMA added.

The lockdown has forced hotels and holiday parks to close and prevented people from travelling to planned breaks.

The CMA said that in most cases it would expect customers to be offered a full refund if the service they had booked was not provided, including when the customer had cancelled themselves if it was due to the lockdown.

In many cases, holidaymakers have been told that deposits are unrefundable, or that they need to make a special request if they want a refund rather than a voucher. Many are struggling to get through to customer service teams, whose members are working from home and are often short-staffed.

The CMA said that with summer holiday season approaching, “the potential harm to consumers from companies failing to respect consumers’ cancellation rights is set to grow”. It has referred complaints about airlines to the Civil Aviation Authority, which oversees those companies.

The CAA is separately reviewing the way that airlines are treating their customers, and last week warned them that it did not “expect airlines to systematically deny consumers their right to a refund”.

In late April, the CMA said it would be investigating firms providing holiday accommodation along with those in the wedding and childcare sectors. In its update, it had opened cases against some companies in those sectors.

The CMA stressed that most businesses were doing the right thing, saying that complaints related to just over 16,000 individual private-sector businesses in the UK.

“The vast majority of businesses are behaving in a reasonable way, but the CMA will not hesitate to take enforcement action if there is evidence that businesses have breached competition or consumer protection law,” it said.

Between 11 and 17 May, an average of 1,200 people a day got in touch to make a complaint, of which about 850 involved cancellations and refunds. Most of the rest involved price rises, typically on food and drink or hygiene-related products.

The CMA said the largest price increases reported to it concerned hand sanitiser, with a reported median rise of just under 400%.

The travel sector has been hard hit by the crisis, with the accountancy group UHY Hacker Young saying average turnover among agencies and tour operators slumped by 56% in March.

Total turnover was £1.2bn that month, compared with £2.6bn last March, it said, adding that companies had faced cancellations at what would have been some of the highest-revenue points in their calendar.

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