Crackdown on travel agent cover


Holidaymakers will have more protection when they buy insurance from travel agents after the government announced it would regulate the sector.

Couple in a travel agents

Ed Balls, economic secretary to the Treasury, said today that travel insurance sold alongside holidays by travel agents would come under the jurisdiction of the Financial Services Authority.

It means that travel agents selling insurance will have to establish that it is suitable for the customer before they buy it. They will have to comply with FSA rules on treating customers fairly and customers themselves will have recourse to the Financial Ombudsman Service if they want to complain about how a policy was sold to them.

Mr Balls said: 'Evidence shows that companies regulated by the FSA are better at getting consumers to make an informed choice because they are better at explaining the key features and exclusions of the product and guiding the customer through the sales process.'

The new regulations for travel agents will come into effect from January 2009, following a further period of consultation. The changes come after accusations from consumer groups that holidaymakers were routinely being sold overpriced and unsuitable insurance by travel agents.

Travel agents had campaigned against the changes, arguing that the industry could improve standards without regulatory intervention.

But earlier this year MPs called for a crackdown on the travel insurance sector after the Treasury Select Committee concluded that agents were not bringing significant exclusions in policies to the attention of holidaymakers and that there was a risk of consumer detriment.

Mike Monk, head of finance for the Association of British Travel Agents, said: 'We feel we made a good case for travel agents remaining outside the regulatory regime so we are disappointed that the Treasury is taking these steps. Our memebrs, and we believe the industry in general, are meeting standards in the sale of insurance. The danger with more regulation is that travel agents will stop selling insurance and holidaymakers will travel without any cover.

'We will work with the government in the nest stage of consultation to make sure they get the balance right.'

Crackdown on travel agent cover

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