Tourists gain better insurance protection - from 2009

Millions of holidaymakers will enjoy greater protection when they buy insurance from travel agents and tour operators after the government yesterday announced a tougher regulation regime.

Ed Balls, the economic secretary to the Treasury, said some of the 20 million people who buy travel insurance each year were putting themselves and their families at risk by taking out cover that may not meet their needs.

Consumer groups welcomed as long overdue the news that the Financial Services Authority would police travel insurance sold with a holiday. Travel firms will have to meet statutory requirements on treating customers fairly, and customers will have access to the Financial Ombudsman Service if things go wrong.
But the move will not benefit the millions preparing to pack their bags for this summer's break or next year's holidaymakers; it will take effect from January 2009 after a further period of consultation.

The announcement follows research by Which? and others that has indicated that not only are travel agents' policies generally more expensive, but these firms often do not follow basic procedures when selling insurance. The FSA already regulates travel cover sold directly to people by insurers and brokers.

In November the Treasury expressed concern that half of all policies fail to provide guaranteed cover for medical expenses after a terrorist attack.

Yesterday Mr Balls said there was evidence that firms regulated by the FSA had more success in getting consumers to make an informed choice because they were better at guiding people through the sales process and explaining the key features and policy exclusions.

"Consumers in the future buying travel insurance sold alongside their holiday will get the same core regulatory protection and rights as consumers buying stand-alone travel insurance do now."

The announcement is a belated u-turn after the government in 2003 rejected demands for regulation, prompting much anger among consumer bodies. Which? said: "This finally offers consumers the protection they deserve."

Which? carried out research last year that found that two-thirds of travel agents failed to ask about people's medical histories and most did not explain what their policies covered.

Travel firms that decide not to seek FSA authorisation will be able to sell insurance on behalf of a regulated company.

The Office of Fair Trading yesterday announced it was embarking on a six-month "programme of work" with the credit card industry and consumer bodies to make the cost of credit cards easier for people to understand.

The OFT will look at how pricing information can be improved. This follows a super-complaint from Which? that highlighted how consumers were choosing cards without understanding all the issues that affect the cost.
by:Rupert Jones
money.guardian.co.uk