Since the outbreak of the coronavirus pandemic, there has been an unprecedented number of cancellations of trips, holidays, and other events. In these circumstances, consumers are generally entitled to claim a refund from the travel or service provider.

For packaged holidays, if the provider goes out of business, consumers should contact ABTA or ATOL, or a similar guarantee scheme. If the consumer is not covered by a guarantee scheme, then they might be able to make a claim with their credit or debit card provider or their travel insurer.

From an insurance perspective, the guidance applies to any situation where an insurance provider refers a consumer to a card provider for a claim under section 75 of the Consumer Credit Act.  Most notably this would be in the travel industry, but could also apply to other insurances, for example, event cancellations or wedding cancellations.

The guidance says insurers should:

  • take reasonable steps to minimise the possibility that they refer their customers to card providers, where this would not be in the consumer’s interest (i.e. when they are unlikely to have a valid claim with their card provider). This could include:
    • outlining to the customer what section 75 covers, including where they might not be eligible for the protection;
    • asking questions to assess if the customer is unlikely to have the basis for a claim, under section 75, against the card provider;
    • highlighting case study examples to help consumers to decide what to do;
    • considering possible arrangements with card providers to reduce the scope for consumers to be unfairly passed among regulated firms;
  • explain to their customers why they are asking them to go to their card provider first (where relevant).
  • explain to their customers the benefits of claiming with their card provider, and why this might lead to a better outcome for them. For example, the customer may be able to claim the full amount they paid (including any consequential losses and expenses) without paying an excess, or recoup losses for all party members on the booking, some of whom may not have insurance.

This proposed guidance aims to address the harm caused as a direct result of the coronavirus pandemic.  As such it is proposed that it should be effective for 6 months following the publication of the Final Guidance.  Comments are requested by 13th August.