Coronavirus: Government confirms holiday refund credit notes are protected

Holidaymakers have been reassured that refund credit notes (RCNs) are protected under a government guaranteed scheme.

Ministers have finally confirmed that these refund promises are secure even if a travel company goes bust.

RCNs were handed out by many holiday companies at the beginning of the pandemic as global travel was suspended.

The credit notes allowed customers to book another holiday or be eligible for a refund once the RCN had expired.

They were popular among travel firms because it meant they did not have to find the cash for thousands of refunds. By law anyone whose package holiday is cancelled has the right to a full cash refund within 14 days.

Until now, it has been unclear whether RCNs would be honoured if a company went into administration.

The Department for Transport and the Civil Aviation Authority (CAA) have now confirmed that RCNs are protected under the Atol scheme, which is government-guaranteed and administered by the CAA.

It will apply to all relevant coronavirus-related RCNs issued by Atol holders operating within the UK between 10 March and 30 September. All refunds will be honoured and paid from a central fund, even if the provider goes bust.

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"This is not only good news for anyone looking to get away for a break in the sun, but also for the aviation and travel sector which has been hit hard by the pandemic," said Transport Secretary Grant Shapps.

"It's providing more flexibility, with the government standing behind the consumer and also the travel companies," he told the BBC.

But customers’ money will not be secure if they accept vouchers instead of RCNs because they are not Atol protected.

Some travel firms have been offering vouchers worth more than the original booking, to encourage customers not to request cash.

In May, Specialist Leisure Group, which included the tour operator Shearings, collapsed into administration with 2,500 jobs lost overnight.