The assessments will come into effect on June 1 for all existing and new standard and small business Atol holders.
New financial ratios, which involve comparing one set of figures with another, are being brought in. Each travel business will then need to input the data into the CAA’s online self-assessment tool.
The motives behind the move have been lauded, but some Atol experts have questioned the decision not to reveal the individual metrics used to assess a company. “We now know which financial tests will apply, but the CAA won’t tell us which they view as more important or what ratio score they consider to be good, bad or ugly,” said Martin Alcock, director of the Travel Trade Consultancy.
“Imagine sitting an exam but instead of a known pass mark you had one of those random Magic 8 balls telling you the result.”
The new financial tests were originally slated to be announced in May 2015 and introduced in October 2015.
However, despite criticism, other experts believe the changes are long overdue. “Introducing some controls on small business Atol holders is vital… They have a propensity to fail and some of them have been trading far in excess of what they were supposed to be, with the result that the claims were higher than expected,” said Alan Bowen, legal adviser to the Association of Atol Companies.
Andy Cohen, head of Atol at the CAA, said: “The existing tests have been in place for more than 30 years and needed updating to reflect modern risk-based methods for financially assessing the likelihood of business failure.”
The CAA is clearly taking sensible steps to ensure there are fewer failures in the future but the plans risk making things more complicated for travel businesses.
