Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981 [Seanad]: Second Stage.

Wednesday, 24 March 1982

Dáil Eireann Debate
Vol. 333 No. 3

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Minister for Transport (Mr. Wilson): Information on John P. Wilson  Zoom on John P. Wilson  I move: “That the Bill be now read a Second Time.”

This is not a controversial measure. It is an important consumer protection measure which had been promised for some time. The Bill was prepared on the instructions of Deputy Albert Reynolds under the previous Fianna Fáil administration and was subsequently accepted by the Coalition Government. My predecessor, Deputy Paddy Cooney, introduced the Bill in Seanad Éireann on 21 November 1981 where it was welcomed by all sides of the House and passed Committee and Final Stages on 9 December 1981.

The basic purpose of this Bill is to provide in law for measures to govern and regulate the operation of the Irish travel industry and to protect the interests of the travelling public. The measure before the House is an enabling one and the implementation of the protection measures provided for will necessitate the making of regulations.

The House will be well aware of some of the difficulties experienced by customers of the travel trade in the past couple of years. The question of the regulation of the travel trade in the interests of the travelling public has been an ongoing [285] issue for some years now. The ideal situation would be one where governmental regulation could be avoided. With that end in mind, successive Ministers for Transport have, in recent years, urged the trade to aim at a high degree of self-regulation in the interests of both the trade and the public. The trade, through the medium of the Irish Travel Agents' Association, did establish a fund which was used in the case of the failure of two relatively small companies and was also drawn on in the arrangements in which the ITAA participated in relation to Bray Travel clients who were abroad on holidays at the time of that collapse. However, the fund never reached a level sufficient to deal with a major collapse in the trade, such as occurred in December 1980 in the case of Bray Travel. I acknowledge that, particularly in the wake of the Bray Travel collapse, the trade took upon itself in a more serious way to protect its customers by voluntary bonding arrangements and so on. Nevertheless, events have demonstrated that a need exists for Government-sponsored arrangements based on legislation to protect the public.

The Irish travel trade consists of tour operators who negotiate and organise tours, arrange travel, book hotels, publish brochures and so on and travel agents who are the retail outlets for the sale of holiday packages, airline tickets, sea voyages, etc., on behalf of tour operators and transport carriers. At present there are about 30 tour operators in Ireland advertising to more than 100 destinations. There are, in addition, about 200 travel agents in the country, many of whom, although primarily concerned with the retail of packages on behalf of various tour operators, organise weekend tours to London, Amsterdam, and so on. The majority of tour operators and travel agents are members of the Irish Travel Agents' Association.

The person buying a holiday is in the unique position of paying in full and in advance for a very perishable product available outside the jurisdiction almost entirely on the basis of descriptions of the product contained in a holiday brochure. Needless to say, these are extremely [286] attractive. The vast majority of Irish tour operators and travel agents are responsible individuals. However, there is at present no ban on entry to the trade and no criteria or qualifications to be met by new entrants. At present a person can rent a basement flat or shopfront, set himself up and advertise as a tour operator or travel agent and proceed to accept large sums of money over the counter for a service that may or may not materialise, depending on a whole range of factors. The Irish Travel Agents' Association have only limited means of enforcing consumer protection measures on their members and, of course, have no function or power whatever in relation to non-members or new entrants to the trade.

The collapses which have occurred have prompted the ITAA and individual operators to look closely at the degree of protection offered to their customers. As a result the ITAA, as a body and a number of tour operators individually, have secured bonds from insurance companies and banks which are being widely advertised as offering safeguards to the public booking holidays on trust. Action along those lines is, of course, to be commended; the pity is that it took a major collapse in the trade to spur the move.

The bonding arrangements entered into voluntarily were the subject of a study last year by Messrs. Craig Gardner, management consultants, on behalf of the Director of Consumer Affairs. The findings in that study, though necessarily tentative because of the nature of the exercise, pointed to some major shortcomings in the trade. Chief among the shortcomings was the capital structure, with companies trading on the basis of a relatively low paid-up capital compared to the size of their turnover. A further indication of this inadequate capital backing can be found in the fact that only one of the companies surveyed owned their premises with the remainder having their premises on lease. While this may be typical of service industries with little or no investment in fixed assets, the under-capitalisation which the survey revealed, coupled with the absence of reserves or other readily liquifiable [287] resources, suggests a heavy reliance in the trade on credit and cash flow with all the dangers that such a situation holds for the consumer when things go wrong for an operator.

In the area of bonding arrangements, the consultants found that generally tour operators who were members of the Irish Travel Agents' Association were bonded individually to the extent of 5 per cent of turnover, backed up by a reserve fund of £50,000 and a group bond of £500,000 for the summer 1981 season. These arrangements were of course voluntary, and the consultants pointed out that it was very difficult for any trade association to regulate its members when all the regulations were voluntary. For these reasons the consultants concluded, among other things, that the only way to enforce the adequate bonding of tour operators was by means of legislation.

The basic elements envisaged in the present measure are:

— a bonding arrangement for tour operators and travel agents for the protection of their customers;

— a back-up protection fund to be raised by contributions from tour operators on a basis to be determined by the Minister for Transport:

— a system of licensing to control entry to the trade.

The bonding arrangements, which would be inter-linked with the licensing system, would represent the first line of defence in the event of an operator or agent failing to meet his commitments and the protection fund would represent the reserve. Availability of an adequate bond would be an essential requirement before any operator or agent would be considered for a licence.

The basic objectives of the Bill are to prevent failures in the trade as well as to provide remedies where failures occur, to protect the consumer as well as to regulate the trade. Consumer protection is the major motive, but the licensing and bonding elements will have, as a major objective also, the imposition of certain [288] rigours and disciplines designed to put the trade on a proper footing over time and in this way to seek to prevent failures. It is envisaged that the bonding requirement will lead to financial assessments by underwriters who are expert at gauging risks and tour operators who are seriously under-capitalised are likely to be faced with the choice of improving their financial position, paying a high premium or not securing a bond at all. In the same way it is envisaged that in vetting applications for licences, I will be able to call for details of financial resources, reports and balance sheets, and pay particular regard to the degree of capitalisation of applicants and condition licences accordingly.

The three elements involved represent an integrated package which draws on the best elements of protection in force in other European countries. A number of other possible options were considered including the possibility of some form of insurance arrangements. However, such arrangements would not prevent the entry of undesirable elements into the trade and were accordingly discarded in favour of licensing and bonding arrangements of the type envisaged.

The Bill has been generally well received by all the interests concerned. I am aware that retailers, particularly smaller ones, have been concerned about the question of having to secure licences and provide bonds, and I know that many public representatives received representations from retailers about the matter. During the course of the Seanad debate on this measure, many Senators made the point that they would be worried that the Bill might be unduly onerous where agents are concerned. My predecessor gave much consideration to this point in advance of introducing the Bill and came to the conclusion that we would not succeed in achieving our fundamental objective to protect the travelling public unless we included agents. I share that view. I acknowledge that retailers, members of the ITAA, have a good track record, but the question of new entrants to the trade or retailers who are not members of the ITAA is a matter which needs to be considered. However, the Bill is [289] essentially an enabling measure to be implemented by way of regulation. Provision will be made for the particular difficulties of the travel agent and full consultations will take place with the trade in drafting the implementing regulations. My predecessor made this point clear when he addressed the annual banquet of the Irish Travel Agents' Association in Limerick last November and I am happy to confirm it again today.

I am aware that this was not an easy Bill to prepare and that drafting turned out to be somewhat more complex than one would have anticipated at first sight. The first difficulty to be resolved was balancing the need to protect the consumer against the need to avoid the imposition of excessive restrictions on the trade. I believe that the package constructed has been built carefully to achieve that end — to protect the consumer without imposing any undue restrictions on the trade.

Deputies will note that the term “inability or failure of a tour operator to meet his financial or contractual obligations” is very carefully and fully defined in section 2. It will be clear from this that the measures provided for in the Bill are intended to protect travellers in a disaster situation where a tour operator or agent goes out of business or absconds with customers' moneys etc. The bonding and protection fund are not intended to be used to compensate individual or particular clients where, for example, an operator or agent is unable to provide a flight on the date specified due to circumstances outside his control, such as an airline strike. Deputies will appreciate that in such circumstances there could be no question of calling in a bond, revoking a licence or terminating an operator's or agent's means of livelihood and in such cases of force majeure or in cases of an act of God, the question of refunds or the arrangement of an alternative flight or holiday are matters for settlement between the tour operator and the traveller concerned in accordance with the provisions of the original booking contract.

In a statement issued on 22 September last, the Director of Consumer Affairs [290] supported the proposals provided for in this Bill and indicated his belief that the measures involved offer the best hope of avoiding a repetition of the extensive losses which some consumers have suffered in recent times.

There were lengthy consultations with the travel trade in the preparation of this measure. The Bill has been welcomed by the trade and I would like to place on record the assistance received from the trade in preparing this measure and to express my gratitude. This consultation process will, of course, continue through the implementing stage.

I should remind the House that the present measure is an enabling one, and the House may be assured that I will proceed with all possible speed to make the necessary orders and regulations to bring the relevant arrangements into operation. I can say now, however, that the practicalities involved in implementation and indeed the need for further consultations with the trade make it impossible to have all the protection arrangements involved operational for the 1982 summer season. Indeed, even if the proposed measures could be brought into force overnight, it would take some time, for example, to build up the protection fund to a level that would be sufficient to deal with a major collapse. In these circumstances there is an obligation on the trade, in their own interest, both from a customer-relationship point of view and in establishing or maintaining credibility with banks and insurance companies, to offer protection in the intervening period by maintaining or improving their existing bonding and other protection arrangements.

The present measure is an important consumer protection measure and I am happy to recommend it to the House.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  May I first of all congratulate the Minister on his appointment to the office of the Department of Transport and offer good wishes to him in the discharge of his duties there?

I am glad to see this measure being brought forward so early in the life of the new Dáil. Whether that is fortuitous because the budget has been postponed [291] until Thursday I will not deal with in detail. As the Minister said, the original measure had been under consideration by Deputy Reynolds, and I introduced the measure in the Seanad where it passed all its Stages.

There is no area of disagreement between us on the principles of the Bill. I echo the Minister's tributes to the travel trade, who have shown a lot of responsibility with regard to their obligations to customers, and obvious sensitivity about their standing and reputation. They have shown this first in the high degree of co-operation which they offered to the Department during the framing of this legislation, in their availability for consultation with regard to the legislation and, more important, with regard to the regulations which will be necessary in the implementation of the legislation. It is only right that the appreciation of the House should be put on record in this respect.

Another matter for which the trade deserve to be commended is the steps they have taken, so to speak, to put their house in order pending the passage of the legislation and the implementation of the regulations. It is unfortunate that it took a number of rather spectacular collapses in the trade to highlight the need for bonding protection for customers. That is not to say there was not protection already, and in the case of a great many operators that level of protection is being extended. Now it behoves the public to make simple inquiries to see whether the firm with which they intend to deal is bonded.

The travelling public will find that all responsible firms are so protected. It is important particularly this year that customers should be protected and should make such inquiries before they deal with a firm because from what one gathers from the newspapers the foreign travel business is not as buoyant this year as previously. In addition, new financial burdens will be placed on foreign travel as a result of tomorrow's budget, and that may have a significant effect on a business which is notorious for relying on cash flow for viability. It is a business which [292] tends to be under-capitalised and in such a business any squeeze in cash flow can have serious consequences.

Therefore, the advice I offer to people who are booking foreign holidays this year is to make sure that they book only with a bonded firm. Of course the responsible members of the trade are bonded and difficulties there should not arise, but as the Minister said, it is possible for irresponsible elements to enter the trade who do not have adequate qualifications, knowledge or experience of the business and who are not adequately capitalised. The proposed system of licensing will put an end to that and, as the Minister said, the bonding requirement will constitute a vetting procedure on new entrants because a firm which the Department would not regard as suitable because of lack of experience or capital structure would have difficulty in entering the trade. The regulations to be implemented later will act as a further vetting procedure. This vetting of new entrants will ensure that when the new regime comes into operation only firms who are healthy ab initio will be trading. Therefore, the possibility of collapse for the reasons that have caused collapses heretofore will have been removed and it is difficult to foresee how any firm could go out of business except from some unforeseen commercial disaster.

I wonder if in practice the protection fund will ever be called upon. I agree, of course, that it should be set up, but I suggest that the size of the fund should be looked at early on to ensure that an excessive amount would not be gathered into it. I think that in every jurisdiction where there is a licensing system such as is proposed here it has been possible to reduce if not cease altogether contributions from the trade to the protection fund. I am sure that is something that will be considered carefully. It is a matter which exercised my consideration and I believe the Minister will give serious thought to it also. There is the question of the use that might be made of the moneys in that fund and the fruit of the fund. Obviously, a substantial sum will be put into the fund. It would not be worth having if it were not reasonably [293] substantial but it must be in proportion to the risk that it is envisaged should be covered and, as I indicated, I think that risk will be small after the new regime. Nevertheless, there will still have to be a reasonably substantial fund and whether that money is to lie dormant and the fruits to be reinvested in the fund or whether they are to be used for some other purpose is a matter which must be considered. It is difficult to see what use could be made of that money because it is obviously in the nature of trust money subscribed by particular persons, a section of the travelling public, and the nature of the Trusts Bill will limit the uses to which the fund can be put.

Before concluding I wish to pay tribute to Aer Lingus for effecting the rescue operation last year of a number of Irish holidaymakers who were stranded due to the inability of a firm to meet its commitments to them. If we did not have a national air carrier that rescue operation might have been extremely difficult to arrange and I want to put on record the ready co-operation of Aer Lingus, an acknowledgment by them of their special position in relation to stranded Irish visitors. We hope, however, that when the new regime comes into operation next year such calls will not have to be made. In future if they are made there will be a fund to remunerate the airline promptly for the expense involved.

I am glad to see this measure coming up so quickly. I hope the regulations can be made and the implementation of it achieved in time for the 1983 holiday season. I am well aware that the regulations in this case are more significant than the usual consequential regulations made following the passage of a statute because they in effect will be the operating regime for the tourist industry from then on. Obviously, their drafting is more complex than normal. Yet, because of the need for it and urgency in having this scheme operational I share the Minister's implied hope when he says they will not be available for 1982 but will be available for 1983.

Mr. N. Brennan: Information on Edward Brennan  Zoom on Edward Brennan  Like other Deputies I welcome this measure which, if anything, [294] was overdue. Personally I should like to see a figure stated in respect of the bond: it seems that no figure is there at present. I should like to see it stated that the bond must be so many thousand pounds. I know it has been stated that it could be £3 or £5 per head but I would like to have a very substantial figure stated for the bond which would ensure that anybody booking holidays would have no worry about whether they would go or not. The recent collapse of Bray Travel which, I suppose, gave rise to this measure indicates that there should be some measures taken to prevent any recurrence of such an event. Anybody who books a holiday should have no worry or uncertainty about going or not going. They should not have to go to the airport to find out that the holiday is not on. The provision being made now will, I hope, close any existing loopholes, but a close eye will have to be kept on this matter. The Bill goes a long way towards achieving this. We cannot afford to have any recurrence of the situation where 1,500 persons lost their money as happened in the Bray Travel case. As Deputy Cooney has said it was through the goodwill of Aer Lingus and other people that the travellers were brought home.

Any citizens booking holidays here should have no worries on that score. When they pay their money they should be assured that the holiday will go ahead as planned. This measure should instil confidence that this will be the situation in the future. I should however like to see a figure stated for the fund and this is something the Minister should consider so that only bona fide operators could do the job. If a firm of the calibre of Bray Travel collapsed it is possible that other firms could collapse. I compliment the Minister on the celerity with which he has introduced this measure and I hope there will be no recurrence of the previous situation so that holiday makers who have booked a holiday can travel without a hitch or fear of the travel agency collapsing. I gather that we have about 200 of those agencies. Personally, I have never availed of the sunny beaches of Majorca or these places but I should like to feel secure if I were going there. Even [295] though it will not be possible to implement this measure in 1982 I trust the Bill will be a warning to travel agents that we are in earnest about this matter and that there will be no further collapses such as that in the case of Bray Travel.

Mr. G. Birmingham: Information on George. M. Birmingham  Zoom on George. M. Birmingham  I congratulate the Minister on his appointment and I welcome the Bill which surely will have an easy passage through the House given its rather broad parentage seeing that the original sponsor of the measure, Deputy Cooney, now finds himself in opposition and the Bill being introduced by the incoming administration.

I am pleased that both Governments have accorded a degree of priority to this measure which having regard to the recent history of the trade seems to me entirely appropriate. It was among the first measures introduced by the previous Government and it is now the first substantial piece of legislation to emerge from the incoming Government. The fact that both Governments have given it such a degree of priority shows the level of public concern that exists in this area. I welcome the aims of the Bill. It seems to me the measure does two things: it tries to prevent collapses in the future and prevent difficultues arising — that should be our primary objective — and at the same time provides a remedy in the event of difficulties actually arising.

The approach that has been taken, one of licensing and bonding, is probably the correct approach. I know that when the question first arose it seemed that something might be done in the nature of insurance and so on. But I can see that difficulties would arise and I can see that licensing and bonding is the correct approach. But that obviously begs the question about the adequacy of the bond and the arrangements that are going to be made there. We are in a difficulty in that we are discussing legislation which is essentially enabling legislation and the real meat of the measure will come in the regulations that are to follow. I would caution that many of the operators at the moment advertise the fact that their holidays are bonded. There appears to be [296] some ground for apprehension that the bondings are not all as secure as they might be. I would caution the Minister that when drafting the regulations he should not adopt, in any sense, the present status quo vis-à-vis bonding as his guideline but that he should strike out afresh and in no sense feel that all he has to do is to put the present level of protection on a statutory basis, because that would be quite inadequate and would fail to meet the needs of the situation.

There is one area to which I want to refer. This debate and the introduction of the legislation is largely sparked by several highly publicised collapses, the most notable of which was the Bray Travel collapse. I have spoken to quite a number of the people who found themselves victims of that collapse. Some of them were engaged couples who had put whatever spare cash was available to them into their honeymoon plans. I spoke to one man who after 20 or 30 years without a foreign holiday found himself redundant, saw hopes of getting himself into another occupation, and decided to take advantage of the redundancy money to take his first foreign holiday in his entire adult life and invested his redundancy money to bring himself and his wife on a holiday, and that was down the drain.

As legislators we have a responsibility to those who find themselves victims because this is a subject that has been talked about for years. It did not come out of the blue. There were parallels in Britain. We all knew or should have known that this was an area where dangers arose, where people were at risk. If as legislators we fail to take the necessary action in time to protect consumers, then we have the responsibility to remedy that situation. Buying a foreign holiday is almost unique in terms of a transaction in the extent to which somebody is at risk and is required to pay generally the whole amount well in advance and, in the nature of things, for something which he is incapable of inspecting. If one is going to buy a car one can test drive it and bring in a mechanic to look at it. If one is going to buy clothing one has an opportunity to look at it on the counter. But it would be [297] hard to find another area where someone is required to pay in advance the entire purchase price, a very substantial amount, without any opportunity of finding out what is going to be on offer except for relying on the representations made by the tour operators or the travel agency. For that reason we should all have recognised that people required to pay in advance were in a particularly vulnerable situation and we had been alerted by what happened in Britain to just what the consequences could be from that. Yet, as legislators we failed to respond in time.

We have an obligation. I would remind the House that there have been other areas of activity where it was felt that the legislation was not as effective as it might have been in securing the interests of people who were at risk and in that situation those people were compensated in full. I refer to the actions in relation to the investors in the Irish Trust Bank who were compensated in full by the party now in Government. At that stage it was accepted that it was important to establish that our regulations for the banks were adequate and if they were not adequate that as legislators and as a Government we would stand behind people who had relied on their adequacy. I suggest that exactly the same principle applies here and I suggest that we have a very clear obligation to those who find themselves victims, in particular of the Bray Travel collapse.

This subject was touched on by the previous Government when the matter was before the Seanad. At that stage the then Minister, Deputy Cooney, indicated his sympathy with the victims but pointed out that at that time any firm decision to make funds available would be premature. So it would be, because the liquidation proceedings were still before the court and nobody knew whether funds were in fact going to be available. It would not be desirable that State funds would be available to the victims when funds might have been available within either the company itself or some associated company. But it is now quite clear that the victims of Bray Travel are not [298] going to be compensated unless the Minister opposite and the Government make funds available. I challenge the Minister to tell this House why, if those whose circumstances are such that they are in a position to be substantial investors in a merchant bank where they go after high interest rates knowing that the high interest rates are a function of risk, are entitled to be baled out, the small man who finds himself the victim of this collapse and who we have failed to protect in the past should not now be similarly protected. I would ask the Minister when replying to advert to this question and to indicate what can be done for these people because he is a member of the party who in the past have shown this determination to stand behind the adequacy of protection in a field where protection is seen as being necessary. This is manifestly a case where protection was necessary and he has an absolute obligation, now that it is clear that there is no other course available, to make the necessary funds available. I ask the Minister now to meet the needs of the Bray Travel victims.

Mr. Bellew: Information on Thomas Bellew  Zoom on Thomas Bellew  Ba mhaith liom cúpla focail a rá ar an Bhille seo, ach ar an gcéad dul síos ba mhaith liom comhghaírdeas a ghabháil leis an Aire as ucht na oifige atá aige anois agus ta súil agam go ndéanfaidh sé sár obair san Roinn sin.

I would like to say a few words on this Bill. Perhaps being a new Deputy and speaking for the first time in this House, the Chair would give me a little leeway. I am somewhat disappointed about the contents of the Bill. I have always felt that Bills of their very nature — I suppose it has something to do with the necessity to draft them in some legal form which is a custom going back over a long period of time — never seem to deal with the problems which they were originally brought in to deal with. A person who has been deprived of a holiday due to such circumstances is a victim for whose protection one presumes the Bill was brought in. However, reading through the various sections one finds that by the time the unfortunate victim would get [299] compensation the value of the money in question would have dissipated, somewhat in a similar way to what happens in relation to malicious injury claims, because of the lengthy procedure involved in claiming where operators have failed to keep their contractual obligations. However that is the system and I do not suppose my contribution will change it. Would it be possible to have a more speedy solution to the various problems that have arisen? One presumes that there will be no retrospection but that new situations will be dealt with as they arise. I hope that the Bill when it is implemented will not be a pious platitude and have little effect. I would like to think that it will have teeth and be operated in a practical fashion to the benefit of people who are the victims of the collapse of any tour operator.

As regards granting licences, it is only correct that there should be certain requirements attached to this. I should like if the question of the bond was spelled out more clearly. No doubt many Deputies have practical experience of bonding in relation to housing and the construction industry where it has been found that it is virtually impossible, because of the manner in which the bond has been drawn up, to get any redress in respect of the collapse of a firm or failure to complete a house. The Minister should ensure that whatever regulations are made regarding the bond are incapable of being mistreated and that the bond should be for the benefit of the person who has lost out on a holiday.

The time scale between the occurrence of any wrong and the redress a person may expect to receive is very long. I do not know what the Minister may be able to do in that respect but it is necessary to have speedy redress. One can imagine the situation of a young couple going on honeymoon and due to the collapse of a tour operator that happy holiday has to be abandoned. There is little redress in offering such a couple financial compensation two years later, which appears to be the situation that might arise under the Bill if there is a question of insolvency, liquidation or bankruptcy.

[300] I welcome the principles in the Bill and hope that it will go some way towards rectifying the situation which arose in the past.

Mr. Barrett: Information on Seán Barrett  Zoom on Seán Barrett  (Dún Laoghaire): My contribution to the debate is mainly a plea. I welcome the Bill. The outgoing Minister, Deputy Cooney, was unable to make provision for the victims of Bray Travel by virtue of the fact that liquidation proceedings were taking place. It is now clear that whatever funds are available will not be presented to assist the victims of Bray Travel. Without the collapse of that firm the urgency which was placed on the implementation of this legislation would not have come about. We all recognise that this group of people have done something for the good of the community at large. I make a plea to the Minister to assist the victims of Bray Travel in some way. I appreciate it will be difficult and I do not mean to make a political point out of this. It is not something one plays politics with. However, we have a group of people who have suffered and who directly contributed to this legislation. It would be a good gesture on the part of the Minister to find a way to assist these people. The efforts they have made justify this. I repeat my plea that some way be found to assist the victims of Bray Travel.

Mr. Briscoe: Information on Ben Briscoe  Zoom on Ben Briscoe  I welcome the Bill. The public will be relieved when it passes through this House. A lot of time has elapsed since it was first introduced.

There is an aspect of people booking holidays which I hope the Minister will have regard to. It is the difficulty many clients have in getting redress for holidays on which they have embarked when they find that the accommodation they get on arrival is not the accommodation they booked. I have been told by many people who have complaints with travel agents at present that it takes a long time to get redress. Sometimes it means having to go to court. The Act dealing with trade descriptions should be brought into force particularly where the accommodation booked by people is not what they get on arrival.

[301] I booked accommodation sometime ago and found it had been allocated to someone else and I was shut away into a little annex. I screamed and roared about this and finally was put back to the place I had booked originally. Not everyone is capable of screaming and roaring when they go on holiday, nor should they have to do this. Travel agents must be held responsible.

I know the Bill is to protect people from fly-by-night operators who are not bonded. I hope the Minister will keep a careful eye on the implementation of the Bill. As the Minister said, I know that the vast majority of tour operators and travel agents are responsible people. People must be careful about whom they book a holiday through and check that the company is a member of the travel agents association. As we know, anyone can set themselves up as a travel agent and simply sell a holiday and get commission from some other travel agent on whose behalf they may be booking the holiday. In the past very often when deposits were taken from those booking the holiday the travel agent just disappeared. There was a case of this not long ago following on the Bray Travel situation. It is fair to say that prior to the 1981 election the then Opposition had said that the people who had lost their money would have that money paid back to them if the then Opposition were returned to Government. Now we know that the Opposition when they were returned to Government did not keep this pledge. I had to speak on this Private Members' Bill in Private Members' time when the public gallery was filled with many people who were described as victims of Bray Travel and who had been given the impression that they would get their money back and that this legislation would be retrospective. That did not happen. It is wrong to mislead people, but the buyer still must beware. The onus is on the public and they are much more alert now to the possibilities of losing their holiday money than they were previously.

It is important that the bonding arrangements be sufficient to protect the person going on holidays. It is very important [302] that if it can be shown that a company took payment from the public knowing full well that the likelihood was that the people who paid would never be able to embark on the holiday, or that the company were likely to close up, they should be prosecuted for fraud because that is what it is. There are too many loopholes in the law at the moment which allow people who know that they are in a very difficult financial situation to get away with this kind of operation.

This Bill is designed to protect the consumer and very little can be said on it that has not been said already. The protections offered in the Bill are in line with protections offered in other countries. Ultimately the bonding of these travel agencies is a very secure way of protecting the consumer. I understand that the trade itself had certain reservations about this Bill because they did not want to have too many restrictions, but they have accepted that this Bill is not too restrictive and will enable them to carry on their business because, naturally, the outlay of money for holidays requires quite an amount of capital outlay and the only source of this capital open to most travel agencies is the people booking holidays.

I should have started by saying that I wish the Minister well in his Ministry and in all the legislation that he will be bringing before this House from time to time.

Minister for Transport (Mr. Wilson): Information on John P. Wilson  Zoom on John P. Wilson  First, I would like to thank the Members of the House for their contributions on this Bill which has been exposed, let us say, to a greater extent than most Bills that have come for Second Reading before the House. The Bill has benefited considerably by public discussion and by its passage through all Stages in Seanad Éireann. I thank Deputy Cooney for his good wishes and for his comments on the Bill. I endorse his remarks with regard to the trade and how helpful they were to him and to me and how helpful we hope they will be in the discussions which will have to take place when we are making regulations.

[303] As I indicated in the course of my speech, a great deal of work has still to be done and its effectiveness will depend on the degree of co-operation that can be established between my Department and the people in the trade. I would like also to endorse Deputy Cooney's remarks in praise of the trade for their attempts to put their house in order. This has been done, as I indicated in my speech, in roughly the kind of way which we are establishing statutorily in this House, by bonding and by having a fund and a very large guarantee. We have, as indicated, licence, bond and fund. They are the three basics in the Bill.

Deputy Cooney went on to emphasise the seriousness of under-capitalisation and of having inexperienced people entering the trade. He pointed out that this was a possible recipe for disaster. The possibility of that kind of collapse is lessened by the very fact of what the ITAA members have done and by the fact that this legislation is being put through the Oireachtas.

The Deputy made an interesting point. He said that an eye should be kept on the size of the fund. Of course, priority, No. 1 is that the fund should be built up to a substantial level, and I take his point that there will be an obligation on the Minister for Transport to see that it does not grow too excessive and just lie there. He indicated that in the UK, which has a similar fund, some steps have been taken to reduce the amount of contribution because of the healthy state of the fund. I tell the House that we will be very pleased if we reach that stage because of the great comfort it would be to those interested in consumer protection.

The Deputy indicated that a considerable amount of work has to be done in consultation with the trade before the regulations are finalised and the provisions of the Act become effective. Deputy Bellew when speaking was disappointed that this could not be expedited, but he will realise that a great deal of work has to be done. There will be an onus on the Department to examine this capitalisation and to have a very good [304] look at the way a particular applicant for a licensing bond is conducting his business.

Deputy Brennan mentioned that legislation was overdue. I think that this Bill would be on the Statute Book already were it not for the various changes that took place, as I indicated. The present Minister for Industry and Energy worked on the Bill and my immediate predecessor had taken it to the Seanad. Therefore, there was no deliberate delay in dealing with it.

Deputy Brennan said that he would like a bigger figure for the bond. Like Deputy Brennan, I deplore the fact that so many people suffered as a result of this collapse. He mentioned a figure of 1,500 people. He need not have any worries about this Bill because the combination of licence, bond and fund will be more than adequate to protect the consumer.

I thank Deputy Birmingham for his congratulations and good wishes and his general welcome for the Bill. He warned — and it is no harm to reiterate it — that there is no proof that the present bonds are necessarily adequate. In this Bill we are seeing to it that there will be adequate bonding and protection. He mentioned the fact that there was full compensation for those who suffered through the collapse of the Irish Trust Bank and talked about the protection of the smaller person who might have been involved in the Bray Travel collapse. I do not accept that the principle is the same, nor do I accept that the people involved in the case of the Irish Trust Bank were large financiers. I had several letters from people in my constituency who had made very modest investments in that venture, emigrants who were hoping to use their investment to return and finish their lives in Ireland. In this matter there was a determination to ensure that the reputation of Irish financial institutions would not suffer, especially abroad. I do not accept the parallel drawn by Deputy Birmingham.

There was never at any time a commitment from Fianna Fáil, either in Government or Opposition, to compensate those who suffered as a result of the Bray Travel collapse. Fine Gael in Opposition [305] did indicate that in Government they would compensate the Bray Travel victims, as Deputy Briscoe called them. Deputy Cooney as Minister found that there were considerable problems in attempting to do this and that there were also some constitutional problems. I wish to put it on record that there was no commitment on our side to pay compensation and there was no breach of trust, though the latter could perhaps be attributed to people who claimed they would pay if in power and did not subsequently do so.

Is mian liom mo bhuíochas a ghabháil leis an Teachta Bellew as ucht a chomhgháirdeas dom agus an méid a dúirt sé faoin Aireacht seo. He said he was not satisfied with the Bill and that the value of money erodes. I do not think that is relevant. The only figures mentioned in the Bill refer to fines and they are substantial enough. I cannot envisage any rate of inflation which will cause a £100,000 fine to be regarded as negligible. In the regulations for bonding and for the fund, provision will be made for adequate consumer protection and compensation. I assure Deputy Bellew that this is a sound Bill and he need have no worries about it.

There is a considerable amount of work to be done before the Bill comes into effect and it is important that the measures which have been taken by the sound people in the trade — they are the vast majority — should continue for the time being to give consumers protection.

I recognise Deputy Barrett's special interest in the case of Bray Travel and I have already dealt with that matter. Deputy Briscoe took exception to people who suffered as a result of the Bray Travel disaster being invited into the gallery and he said they were misled into believing that they would be compensated for what happened to them. Deputy Briscoe's clarion call “let the buyer beware” will be important for the time being, but when the agents and tour operators have been licensed and when the fund has been established the State will be in the position of being beware on [306] behalf of the consumers. I thank Deputy Briscoe for his good wishes.

We know that the 1981 season was very successful for the travel trade and it is natural that there should have been a sense of euphoria with regard to 1982. However, there has been a cutback on the number of seats on offer which would indicate that agents and tour operators are fully conscious of the dangers and are very anxious to apply the strictest and most prudent business principles to their operations for this year.

I thank all Deputies who contributed. When reading the Seanad debate I noticed that many Senators said they hoped there would be a greater concentration on holidays in Ireland and that this Bill might focus too much attention on holidays abroad to the detriment of holidays at home. I would add that Bord Fáilte are concentrating heavily on holidays available at home and are mounting an operation to counteract the large sums of money being spent on foreign holidays.

Question put and agreed to.

Agreed to take remaining Stages today.

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