The CMA COVID-19 Taskforce reports that these two companies collectively account for the majority of all complaints received about holiday lets. This recent announcement follows the CMA guidance in late April on consumer cancellations and refunds, and the announcement that it would be focusing on the sectors against which it had received the most complaints. Based on complaints received by its COVID-19 Taskforce, the CMA identified holiday accommodation as one of the key areas for investigation. The Taskforce has so far received over 5,500 reports about holiday rental accommodation providers.
The CMA also recently published an open letter to the package travel sector highlighting its concerns.
CMA’s latest updates on COVID-19
In its latest COVID-19 Taskforce update, the CMA noted that there has been a significant reduction of complaints in relation to COVID-19 with complaint numbers falling from almost 7,000 a week in May to 3,500 in June however, 70 – 80% of complaints received by the CMA since mid-April have been about unfair practices in relation to cancellations and refunds. Consumers have continued to raise concerns about firms:
- refusing to provide refunds;
- introducing unnecessary complexity into the process of obtaining refunds;
- charging high administration or cancellation fees and
- pressuring consumers into accepting vouchers instead of cash refunds.
On 10 July 2020 the CMA also published an open letter to the package travel sector in response to having received over 17,500 complaints from consumers about difficulties they have faced with package holiday businesses in relation to cancellations and refunds.
The CMA will therefore likely continue to focus on its prioritised sectors (holiday accommodation, wedding and events, and nurseries) and now also extend its remit to the package holiday sector.
CMA takes action against the holiday accommodation sector
CMA secures refunds from second major holiday lets firm
The CMA has announced that, following a CMA investigation opened on 13 May 2020, Sykes Cottages has become the second major holiday lets firm (after Vacation Rentals) to make changes to its refunds and cancellation policies.
Sykes Cottage announced on 3 July 2020 that it is committed to make changes to its policies and has agreed that it will:
- offer a full cash refund to customers who had their holidays cancelled due to COVID-19 restrictions (and have not rebooked);
- convert credit vouchers to cash where it is preferred by the customer (and as long as the credit voucher has not been used) and
- provide the CMA with monthly reports on how many refund offers have been made and accepted.
Action to be taken by businesses in the holiday accommodation sector
Companies within the holiday accommodation sector are encouraged by the CMA to review their policies to ensure that they align with the CMA’s guidance towards refunds and cancellations.
The CMA has stated that it is continuing its inquiries into the holiday accommodation sector, which may ultimately lead to court action against companies which fail to comply.
CMA issues an open letter to the package travel sector
CMA’s new focus on package holidays sector
On 10 July 2020 the CMA published an open letter to all package holiday businesses highlighting its concerns that package holiday businesses are not complying with the law. In particular, the letter notes that consumers have statutory rights under the Package Travel and Linked Travel Arrangements Regulations 2018, and under the Consumer Protection from Unfair Trading Regulations 2008.
Based on over 17,500 complaints it has received, the CMA noted that in general, the harmful conduct being carried out by businesses in the package holiday sector includes:
- Consumers not being offered and/or provided full cash refunds within 14 days of termination and are offered voucher substitutes instead.
- Consumers losing their deposits and/or being charged cancellation fees when terminating a package holiday contract when they are entitled to a full refund.
- Consumers being provided with misleading and unclear information.
- Consumers facing significant barriers when trying to exercise their statutory rights. For example, consumers being asked to request a refund on their terminated package booking by telephone, but being unable to readily contact businesses in this way.
- Consumers being unable to contact businesses effectively to discuss other concerns, such as wanting to pay their balance in order not to forfeit their deposit as a result of late payment.
Action to be taken by businesses in the package holiday sector
Companies within the package holiday sector are expected by the CMA to:
- ensure consumers are given full cash refund 14 days after termination of holiday package due to COVID-19;
- where businesses have breached consumer law, to take immediate action to ensure compliance and address any consumer harm arising from breaches;
- when contacting consumers, provide clear and legally correct information, including the option for refund within 14 days of cancellation;
- where consumers have been given incorrect information, take proactive and prompt steps to explain their statutory right to refund and the options available;
- when a consumer asks for refund, to deal with them directly, rather than direct them to claim forms, insurers or payment card business;
- proactively communicate with consumers and let them know when their refund will be paid.
Guidance for businesses
The CMA’s action represents a stark warning that it expects businesses operating in the sector to take action to bring themselves into compliance with the law or face enforcement action. Given the disruption to the holiday sector, this is likely to be a key focus of investigation. Businesses in this sector should carefully balance any short-term gains from stringent refund policies against the longer term impact of potential regulatory intervention.
