ATOL Trust Deeds
ATOL Trust Deeds are settled documents that the CAA has refined regularly since 2012.
All aspects of Trust arrangement funds are defined in the Trust Deeds.
Trust ATOL applicants are advised to seek legal guidance to ensure they fully understand the deeds.
Premio provides detailed guidance so far as operational matters are concerned.
ATOL Holder Trust Deed
Accredited Body (“AB”) Trust Deed
-ABs’ are ATOL holders which allow other firms to trade under the terms of their ATOL and each has its own conditions of membership.
-Firms apply directly to the AB to become a member and will report to the AB rather than the CAA.
-The AB reports to the CAA regarding licensable business carried out by members under its ATOL.
-The AB is responsible for licensable losses arising from the collapse of an AB member.
-Each AB is required to hold an AB accreditation in addition to an ATOL.
-The AB loses its accreditation if it ceases to hold an ATOL or its ATOL is suspended. -To obtain an ATOL the criteria include financial, fitness and competence and to obtain an accreditation to be an Accredited Body the criteria include financial, systems, structure, governance
controls and a trust arrangement.
ATOL Holder Trust Deed with Trigger Clauses
Franchise Member ATOL holders
-Franchise Agreement with the Air Travel Trust:- the Franchisee enters into agreement with the ATT and, as part of this agreement, the CAA may grant an ATOL to a Franchise Member on the basis of its franchise membership.
-The Franchisee provides guarantees to the ATT to cover losses in the event of an insolvency. Each Franchise Member has its own ATOL and reports to the CAA individually under the terms of that ATOL as well as to the Franchisee. The Franchisee reports separately to the CAA.
Interim Accounts
Accounts (Not Trust Accounts) are used by Trust ATOL holders to accumulate Booking Revenues which will be a mix of ATOL and Non- ATOL funds. The ATOL holder is then required to identify funds in respect of Trust Bookings and transfer those amounts to the trust account(s) on a regular (mostly daily) basis.
Matters to Consider
Operational aspects of ATOL Trust and Reporting
-Payment of Consumer Remittable Funds into Trust
-Management of these funds
-Claims by ATOL Holder
-Reporting by ATOL Holder
ATOL Holders Trust Bank account(s)
Merchant Acquirers and receipt of funds into Trust account(s)
-Possible delay by Acquirer in paying funds in Trust and not in line with Trust Deed which requires that the funds be paid into Trust the day after collection.
ATOL Reporting Accountants and their obligations
ATOL Reporting Accountant (ARA)’
-A firm or individual who is a ‘suitably qualified accountant’ designated by its professional body under the ATOL Reporting Accountants’ Scheme (ARA Scheme) and who is engaged by the ATOL holder to report on information provided by the ATOL holder to the CAA.
-In a firm only an individual will be able to sign the AAR, although they would sign for and on behalf of the firm.
Working capital and cashflow considerations
-ATOL Holders need to model the impact of a Trust account when preparing working capital requirements and cashflow management.
-Premio can provide general guidance and assistance.
Claims from the Trust account
See ATOL Holder Payment Request
ORS3: Official Record Series 3
Air Travel Organisers’ Licensing
These Series provide detailed guidance in respect of The Civil Aviation (Air Travel Organisers’ Licencing) Regulations 2012 (as amended).
Anti-Money laundering
-Premio and its team are responsible for the Anti-Money laundering reporting obligations.
-Any of evidence of fraud, theft of money or any activity that falls within the definitions of the Criminal Finances and Money Laundering Regulations (which are updated from time to time),
Premio Consultancy will follow these regulations in terms of reporting and disclosure to the relevant authorities.
Accountable Person
-ATOL holders are required to appoint an ‘Accountable Person’ from within the organisation to be
-Appointed by ATOL holders (director of company, sole trader or partner as per ATOL Regulations 2012) within organization to be responsible for all matters relating to the ATOL (for completion of returns and any declarations made to CAA)
ATOL Holder Funds in Trust and Payment Request from ATOL Trust
Consumer Remittable Funds’ means all monies paid by Consumers to the ATOL Holder or an Agent in respect of Licensable Transactions entered into by or through the ATOL Holder or an Agent on or after the Commencement Date whether such monies are payable to the ATOL Holder as a principal or as an agent or sub-agent for any Other ATOL Holder or whether such monies are payable to an Agent.
Protected Funds’ means Consumer Remittable Funds that have been paid to the Trustee Account and that have not been paid out by the Trustee previously.
There are detailed definitions of all of the important terms in the Trust Deed (Derived from the ATOL Regulations)
ATOL Holder Payment Request
An ATOL, from time to time, may make Payment Requests (claims) in respect of Protected Funds which are held in the ATOL Trust bank account. The amount will be equal to Consumer Remittable Funds that had become Protected Funds and that were paid by any Consumer and may be claimed under the following components (with conditions of each component being satisfied):
1. Performance
2. Component Performance
3. Component Reimbursement
4. Flight: (i) Flight Carrier Reimbursement (ii) BSP Payment Performance
5. ATOL Holder Package Reimbursement
6. Refund
7. Cancellation
8. Limitation Expiry
9. Closing Date Expiry
10. Scheduled Airline Insurance Refund
11. Supplier Failure Insurance Refund
12. Insurance Premium Refund
13. APC Payment Reimbursement
14. Corporate Credit Card Flight Purchase Reimbursement
15. Fees, Profits and Commissions
Any Licensable Transaction which has been fully performed (and fully performed shall have the same meaning as that term is used in The Package Travel and Linked Travel Arrangements Regulations 2018, Regulation 19(7)) prior to the date of the ATOL Holder Payment Request (‘Performance’);
A component part of a Licensable Transaction (including without limitation the provision of accommodation, ferry or coach transportation or car hire but excluding Flight Accommodation) that has been fully performed prior to the date of the Payment Request
and where the ATOL Holder acted as agent for the Supplier (which Supplier is not itself an Other ATOL Holder) of that component part (‘Component Performance’); or
A component part of a Licensable Transaction (including without limitation the provision of accommodation, ferry or coach transportation or car hire but excluding Flight Accommodation) and which the ATOL Holder has paid to the Supplier of such component
part but only if (A) the ATOL Holder acted as agent for the Supplier (which Supplier is not itself an Other ATOL Holder) of that component part; and (B) the Air Travel Trustees have confirmed that they are satisfied that the ATOL Holder is acting as agent for such Supplier and (as required by the Air Travel Trustees) that the ATOL Holder has obtained Supplier Failure Insurance acceptable to the Air Travel Trustees (‘Component Reimbursement’);
Confidence in Trusts
Travel companies operating with Trust ATOLs’ are aware trust arrangements work well and provide a higher level of assurance. No other consumer protection mechanism provides this level of comfort in protecting consumer funds.
The CAA conduct audits, arranges visits and telephones reviews to monitor the Trustees.
External parties such as Banks, Merchant Acquirers, Suppliers and Interested Third Parties derive great comfort and satisfaction from the existence of Trust accounts. With Trust accounts, they may not ask for security deposits or upfront payments. The combination of ATOL Trusts and oversight by the CAA are important considerations for these external parties.
Consumers would be gratified to learn their funds are controlled and protected in such a precise manner.
Merchant Acquirers generally are exposed to the risk of a travel business’s failure to the fullest extent due to the requirements of Consumer legislation. Consequently, acquirers do take steps to mitigate their liability at short notice by:
(cash and/or insurance)
Operating deferrals and holdings funds for periods of time
Tour Operator and Low-cost airlines amongst others have had restrictions imposed upon their funds by their acquirers. Acquirers can also provide advantageous term to ATOL Trust operators.
Suppliers generally ask for payments upfront and in advance of delivery of the service. That creates a further risk to consumer funds should the Supplier fail to deliver the service that has been paid for in advance.
In the early days of a Trust, it is not uncommon for a business to advise Suppliers and Merchant Acquirers of the existence of these Trusts and seek favourable terms.
Objective Criteria and Concepts
Premio Consultancy’s confidence and faith in operating Trust accounts are supported by an objective assessment when considering key concepts applied in developing, maintaining and operating these Trusts. They are:
The Teams and Sharing of Information
By the nature of the processes involved it is possible to develop effective relations with the Management and Trust teams at the Travel Company thereby ensuring that claims from their Trust accounts are processed expeditiously and information is presented in a consistent manner for all claims thereby enhancing confidence in the process. There is clear understanding of the requirements as set out in the Deeds.
Premio considers the costs of operating these Trust as reasonable and proportionate. Trustees can pass on cost savings by becoming more efficient in carrying out their role.
Businesses operating these Trusts are likely to derive significant benefits when commercial and regulatory costs savings are taken into account. So, Merchant Acquirers, for one are likely to provide more cost beneficial solutions.
Systems, Efficiency & Effectiveness
We have developed systems geared to recording transactions and producing accurate claims data on a timely basis.
The calibre of systems is enhanced when there is open sharing of information.
The Trustees and Company interact in a clearly defined manner so that claims are submitted and substantiated effectively and efficiently so that issues are identified and resolved promptly.