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CMA steps in where the CAA fears to tread

CMA investigates and takes enforcement action

The Civil Aviation Authority (CAA) should be the regulator for air transport in the UK. However, it is increasingly clear that the Competition and Markets Authority (CMA) is doing the CAA’s job for them.

During the course of this year the CMA has taken action against a number of companies which were not giving full refunds where they were owed due to coronavirus cancellations.

This includes: Sykes Cottages and Vacation Rentals in June, Bijou Weddings Group in September and yesterday (15 December) the announcement that following CMA action, LoveHolidays had committed to pay out over £18 million to customers waiting for money back after their holidays were cancelled due to coronavirus.

CAA: A regulator that fails to regulate

In July the CAA reported on its airline refunds review. A number of airlines were found to be hugely failing in their legal duties and they gave commitments to the CAA to resolve the matters. For example, on 3 July, Ryanair published a set of commitments on its website about timescales for processing cash refunds. Ryanair confirmed that 90% of its backlog would be cleared by the end of July 2020 with all refund claims made in April to be processed by 15 July and most of the claims made in May to be refunded by the end of July. This statement has not been updated and just a quick glance on Twitter and in Facebook groups dedicated to Ryanair complaints shows that Ryanair customers are still waiting for refunds.Ryanair aeroplane in sky

Commenting on the review, Richard Moriarty, CAA Chief Executive said: “The airlines we have reviewed have responded by significantly enhancing their performance, reducing their backlogs, and improving their processing speeds in the interests of consumers.

“There is still work to do. We have required commitments from airlines as they continue the job of paying customer refunds. Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”

However, the CAA has failed to take any further action, appearing to believe that no further action is required.

CAA defers but the CMA brings action

It would appear that the CMA disagrees. Today, 16 December, the CMA announced that it was investigating whether airlines have breached consumers’ legal rights by failing to offer cash refunds for flights they could not lawfully take.

The CMA says “The investigation will consider situations where airlines continued to operate flights despite people being unable lawfully to travel for non-essential purposes in the UK or abroad, for example during the second lockdown in England in November.”

The CMA is aware that, in some cases where flights were not cancelled, customers were not offered refunds, even though they could not lawfully travel. Instead, many were offered the option to rebook or to receive a voucher.

The CMA says that it will be working closely with the UK Civil Aviation Authority as it progresses its investigation.  Its press release continues:

“While the Civil Aviation Authority (CAA) leads on consumer protection in the airline sector, the CMA has undertaken extensive action in connection with cancellations and refunds during the pandemic and is well placed to support the CAA on these issues. The CMA and the CAA continue to work closely and share the same enforcement powers to tackle breaches of consumer protection law.

The CMA will now be writing to a number of airlines requiring information to understand more about their approaches to refunds for consumers prevented from flying by lockdown.

Following a careful analysis of this evidence, the CMA then will decide whether to launch enforcement action against individual airlines.”

It is quite clear that the CMA has had to step in and walk where the CAA fails to tread.

Paul Smith, Group Director of Consumers and Markets at the CAA, said :

“It is right that consumer rights are upheld throughout this period and we welcome this investigation from the CMA, which follows our review into airline refunds earlier this year. The CMA has been leading on a broad range of issues arising during the coronavirus pandemic and we will continue to work closely with the CMA in support of this investigation.”

This defensive stance from the CAA makes the regulator appear ridiculous. As the CMA states, it has the same enforcement powers as the CAA. But the CAA has done nothing to enforce anything since their review earlier this year. Airlines continue to flout the law and the CAA appears to have done nothing to ensure that airlines have kept to their June commitments.

No other regulatory body needs another organisation to step in to support their enforcement work. The other regulators, such as Ofgem (Energy), Ofcom (Telecoms) or the Office of Rail and Road (Transport) are able to enforce the law themselves.

So, why does the CAA need help? Because it is ineffective and unwilling to take on the airlines face to face. Has CMA simply had enough of watching this farce unfold?

Hopefully this action by the CMA will shame the CAA into taking further action by itself.

It is the job of the Civil Aviation Authority to investigate airlines but it has continued to take no action. The CAA has told me in the past

“Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”

However, time and time again it has not done so. The CAA has shown itself to be not fit for purpose. Instead it is finding in favour of airlines and continuing to allow them to behave illegally. The CAA has shown itself to be not fit for purpose. The CAA needs to use its enforcement powers to revoke airline operating licenses where airlines do not comply with the law.

Aeroplane in sky with clouds

Further information:

A new Chairman started at the CAA on 1 August 2020. But unfortunately the new chair, Sir Stephen Hillier, has been ineffective in tackling airlines that are continuing to break the law on consumer refunds.

CAA launches consultation and tells no-one… launched a consultation on Alternative Dispute Resolution (ADR) but didn’t tell any stakeholders, as Which? calls for a single Ombudsman in the sector.

More Ombudsman Omnishambles report which looked at approval and monitoring of ADR schemes and followed Ombudsman Omnishambles which looks at the failings of regulatory bodies, including the CAA.

Ryanair tops CAA refund complaints

Getting help for Coronavirus cancellation claims and shopping help and advice for getting refunds and redress

 

 

Categories
ADR Ombudsman Business Latest News

International Ombuds Day

Get to know the arbitrators!

The 8 October 2020 is International Ombuds Day. The second Thursday of every October its aim is to raise awareness of what an Ombudsman does.

square/rectangles blocks with people shaking hands, buildings

What is an ombudsman?

An Ombudsman is an Alternative Dispute Resolution (ADR) provider. You may use an Ombudsman to arbitrate in cases where a business and you are in dispute. An Ombudsman adjudicates and makes a decision which is binding on the trader (they lose membership if don’t abide by the rules but this rare) but not on you should you not agree and want to take the matter to court. The Ombudsman is impartial and cannot side with the business nor with the consumer

There are other different forms of ADR which include arbitration, mediation/conciliation and negotiation.

When should I use an Ombudsman?

You can try other avenues first. For example, you can contact the CEO using ceoemail.com to get the details. Write to the CEO, who may not respond personally, but it will escalate the matter and get their dedicated executive team involved. If you have purchased an item costing more than £100 on a credit card you can try to make a Section 75 claim from your credit card provider, which is jointly liable with the seller. Or you can go to the Small Claims Court. You will need to show that you have considered ADR prior to having your case heard.

Regulated areas

Service providers in the regulated sectors, such as those in energy (Ofgem), communications (Ofcom) and financial services (FCA) must sign up to an Alternative Dispute Resolution (ADR) scheme. In most cases this is an Ombudsman.

Non-regulated areas

In the non-regulated areas, such as providers of goods and services, it is not mandatory for businesses to be a member of an ADR scheme. However, many are and it can be part of the reason for purchasing from a certain company. For example, if you want to make a large home purchase knowing if they are a member of The Furniture & Home Improvement Ombudsman you have somewhere to go if something goes wrong. Same with buying a car from member of The Motor Ombudsman.

Costs of using an Ombudsman

It does not cost you anything to take your complaint to the ombudsman. It is worth remembering that it DOES cost the business both in a yearly fee and per case that is processed. That means it is in the interest of the business to always try to resolve the matter before it goes to an ombudsman.

All providers in the non-regulated sector are funded by their industry. Providers in the regulated sector, such as the Financial Ombudsman, energy and telecoms are also funded by the industry, so that services are free to consumers. Others, such as the Local Government Ombudsman, are funded from public funds.

The Ombudsman process

In general, the complainant has a year in which to bring a claim and can do this 8 weeks from when a complaint was started or when a “deadlock letter” is received. A deadlock letter is requested from the provider stating that they will no longer correspond on the matter.

The differences between an Ombudsman and an ADR provider

To be an Ombudsman the organisation must be a member of the Ombudsman Association and meet a strict set of standards. An ADR provider essentially provides the same service but has lower standards.

There are some problems in the ADR/Ombudsman sector

There are many issues regarding ADR and Ombudsmen providers. These are mainly to do with the oversight by their approval bodies and are highlighted in my articles Government and regulators continue to fail on resolving consumer disputes and Landing in Court with Ryanair. These articles include links to the reports Ombudsman Omnishambles and More Ombudsman Omnishambles.

How approval bodies are failing to properly approve and monitor Alternative Dispute Resolution -

Useful related posts

Top 20 Tips for how to complain effectively

5 myths about Ombudsman providers busted – a post that tackles misconceptions about an Ombudsman.

Why use the Financial Ombudsman? – Director of General Casework describes why and at what point you should contact the Financial Ombudsman Service.

Energy ombudsman shows how to keep heat on your supplier – the Chief Ombudsman at Ombudsman Services shares the traps people fall into and how to make a stronger case when submitting their claim. He looks at energy in particular but the points are valid for all sectors

Ask the Ombudsman: Kevin Grix CEO Dispute Resolution Ombudsman & The Furniture Ombudsman – a post looking at what this Ombudsman does with tips on preventing problems when you shop.