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The main substantive changes are the following:
- The rules on mutual recognition of insolvency protection arrangements are being changed. Under existing rules, companies established in other Member States are permitted to use the insolvency protection schemes of their place of establishment to sell packages and linked travel arrangements to customers in the UK. Once the UK leaves the EU, this will no longer be possible. All companies selling packages and linked travel arrangements to customers in the UK, even if they are established in a Member State, will have to comply with the UK insolvency protection schemes. This will mean that all organisers of flight-inclusive packages sold in the UK will need to hold an ATOL. Similarly, organisers of non-flight packages and facilitators of linked travel arrangements sold in the UK will need to arrange bonding, insurance or a trust account in accordance with UK rules.
- The Brexit Regulations do not address the issue of UK-established companies selling packages, or facilitating linked travel arrangements, to consumers in other Member States. That will be a matter for those Member States, but one expects that the position adopted by the UK will be reciprocated in all other Member States. This is because the mutual recognition of insolvency protection rules set out in the Package Travel Directive 2015 only apply to Member States, and the UK will not be a Member State upon exit from the EU. Accordingly, UK companies will be obliged to take out insolvency protection in accordance with the rules of each Member State into which it sells packages or facilitates linked travel arrangements. For this reason, UK-established companies selling throughout the EU may wish to consider the merits of implementing some simplification measures, such as the creation of an EU establishment for EU sales.
- The current rules make UK-based retailers potentially liable for the packages of non-EEA organisers. In short, UK-based retailers are liable for the proper performance of the package, and for insolvency protection, unless the UK-based retailer can provide evidence that the non-EEA organiser complies with these duties. This rule is being expanded, so that UK-based retailers will also be liable in the same way for the packages of EEA organisers, unless the retailer can provide evidence that the EEA organiser complies with its duties.
- The rules on the identity of bond and insurance providers is also going to change. It will no longer be possible to use providers authorised in other Member States. Similarly, funds in trust accounts must be held in the UK and not in other Member States.
If you would like to discuss these changes further, then please do not hesitate to contact Rhys Griffiths.
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