Civil Aviation Authority (CAA) gets new Chairman

But will the UK’s airline regulator now regulate the sector properly?

The new Chairman of the Civil Aviation Authority (CAA), Sir Stephen Hillier, starts his role tomorrow, 1 August 2020. He begins his new job amid a crisis in the aviation sector and at a time when the regulator is failing to regulate airlines that are knowingly and deliberately breaking the law.

Notably, as a former RAF officer, the new chairman has zero experience in customer-facing environments, zero experience in the commercial aviation sector and no background in consumer law.

CAA review

Yesterday the Civil Aviation Authority (CAA) released its review into airline refund practices during the Covid-19 pandemic, including a list of 18 airlines that it investigated.

Only three – United Airlines, Jet2 and American Airlines – were found to be consistently processing cash refunds quickly, as required by law and having only a small backlog of refund requests. Under Regulation EC261/2004 airlines must refund in full the cost of cancelled flights within 7 days.

I am unsurprised by the CAA’s report and I am highly critical of the regulator’s efforts.

As part of the announcement of his appointment on the CAA website on 7 May 2020 Sir Stephen said “I am delighted to have been given the opportunity to help lead the Civil Aviation Authority through the enormous challenges which lie ahead: maintaining our excellent safety record and promoting the UK’s world-leading aviation sector, while dealing with the consequences of COVID-19 and guiding us through our departure from EASA.”

However, that statement makes no mention of airline passengers. It seems clear that the CAA is still favouring the airlines, rather than their long-suffering passengers, when it comes to enforcing prompt refunds for cancelled flights.

The CAA has a track record of being slow and ineffective. One only has to look at previous research, such as Civil Aviation Authority launches review of airlines’ allocated seating policies in 2018, where no action whatsoever has been taken on the findings.

In April 2020 the CAA was told about airlines issuing Refund Credit Notes instead of cash and when asked what action it was taking to address the problem, a CAA spokesperson simply said “If an airline cancels a flight they are legally obliged to refund the customer.”

Numerous requests for details on any regulatory action the CAA would take, and if vouchers would be covered if the airline goes into administration, went unanswered. At the time an ABTA spokesperson said: “We continue to stress in our discussions with the CAA, as the relevant enforcement body, that airlines are obliged to refund under Regulation 261 and under IATA regulations for IATA members.” Eventually, on the 18 July the CAA announced that the RCN would be ATOL covered if consumers chose to take one.

aeroplane in the sky

Virgin Atlantic is still breaking the law

The CAA review refers to many of the airlines making hardly any improvement during this time. For example, the notorious Virgin Atlantic, one of 14 airlines not processing refunds within an appropriate time frame:

“Virgin Atlantic has committed to reducing the maximum time taken to process a refund and it expects to process all claims made in August within 80 days, all claims made in September within 60 days and all claims made in October within 30 days.”

This is still illegal, yet the CAA is still not imposing any sanctions on Virgin Atlantic.

By contrast, Jet2, American Airlines and United Airlines have been consistently processing cash refunds quickly and with only a small backlog of refund requests.

CMA steps in where the CAA fears to tread

In stark contrast with the CAA, the Competition and Market Authority (CMA) took action in relation to two holiday companies that were not providing refunds promptly. As early as 5 March 2020 the CMA had initiated a taskforce to monitor businesses during the Coronavirus pandemic. 

On 30 April the CMA announced that it would look at 3 areas of concern: Wedding venues, holiday accommodation and nursery and childcare providers. By 9 June the CMA it had taken action to ensure that Vacation Rentals, the firm which operates the Hoseasons and Cottages.com brands, changed their coronavirus refunds policy to comply with consumer law and give cash refunds.

Concluding comment from the Complaining Cow

The CAA needs to do more and up its game.

Whilst most consumers will understand that airlines may not be able to refund within 7 days, they should not still be taking 30, 60 and 80 days.

Three airlines in particular have put the others to shame and are paying refunds promptly. This shows that what consumers are demanding is possible.

The CAA needs to ensure that the airlines are not furloughing staff who could be working to process refunds. I’d like to see the new CAA Chairman take a much stronger lead and ensure that airlines are fully complying with consumer law, without exception. Those that do not should have their operating licences revoked.

He needs to take firm and decisive action now.

If you would like to contact the Chairman of the CAA you can:

Email the CAA Chairman. This will also give you the contact details for other key CAA personnel.

For help with getting refunds see:

Travel in the time of Coronavirus – Your rights explained

5 myths about Ombudsman providers busted

Ombudsman separating the truth from the misconceptions

Background to ADR and Ombudsmen

Alternative Dispute Resolution providers which include ombudsmen, provide services for business and consumers. When you can’t get your complaint resolved and the trader is a member of a scheme you can take your complaint to an ADR provider. Alternative Dispute Resolution: What it all means

In April 2018 the Government produced some research, Resolving Consumer Disputes. The findings included “…in cases where the ADR provider decided in favour of the consumer 83% of consumers perceived the process to be fair. This dropped to 17% in cases where the decision was in favour of the trader or a compromise. A similar, but less extreme, variation was seen for consumers who had used the courts (90% v. 53%).” Not exactly surprising.

lots of images of people shaking hands

The myths about ADR

Being in the world of consumer rights and stuff I talk about this area a lot. However, so often I hear the same inaccurate assumptions and beliefs from members of the public, including journalists. Sometimes these come from personal experience, sometimes guesses, sometimes from inaccuracies reported in the media and sometimes from I don’t know what! There are a lot of issues with the sector but these are mainly to do with oversight of the approval.

But here I am going to bust a few of those popular myths and hope it helps make things clearer! I’m using the term Ombudsman for ease but ADR provider is still the same in terms of these myths. (However, an Ombudsman has to be member of the Ombudsman Association which has higher standards than for non members as shown by their minutes of a meeting revoking the Retail Ombudsman’s membership. See The Retail Ombudsman is no more and the minutes in appendix  J of More Ombudsman Omnishambles.)

5 Commonly held beliefs about ombudsmen

1) Ombudsman are consumer champions

Nope. A consumer champion will fight for the consumer. An ombudsman is an unbiased service. Each case is looked at individually and decisions are made on the evidence provided.

2) Ombudsmen are paid by the traders so will always see in their favour

Nope. The traders pay yes. The alternative would be for consumers to pay at least a proportion! The traders pay a yearly fee plus a case fee. If the case goes to arbitration then in some cases, such as with the Furniture Ombudsman and an independent inspection is required, the trader pays for this too. Therefore it is actually in the traders’ interest to try and resolve the matter and for it not to go to the Ombudsman. If you look at providers’ annual reviews you will see the breakdown of percentages of cases won by trader etc. If the consumer were made to pay as well you might as well go to court and these schemes are there to provide an ALTERNATIVE! An Ombudsman service gets paid the same win or lose so there is no incentive to find in favour of either party.

As an example:

In the period November 2016 to October 2017, Ombudsman Services closed 49,117 energy complaints. Of those, it helped resolve 8% without investigating because the energy company was willing to provide the consumer with their desired resolution.

Of the complaints that Ombudsman Services investigated, it:

  • upheld 66% (finding that the energy supplier had done something wrong and had not done enough to put it right).
  • maintained 26% (finding that although the energy supplier had done something wrong, it had already offered a fair resolution to the customer).
  • did not uphold 8% of complaints, (concluding that there was no substance to the original complaint and the energy supplier had treated the customer fairly).
Rip Off Britain Independent reports

3) All ombudsmen are funded by Government

Nope. All providers in the non-regulated sector, such as furniture and airlines are funded by the 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 with public funds.

4) If the trader doesn’t want to pay up it won’t

In the regulated areas of finance, energy and telecoms if a trader doesn’t abide by an ombudsman’s decision then it will be reported to the regulator. Financial Conduct Authority, Ofgem and Ofcom. They will investigate and if found to be in breach of the rules can be shut down. In the non-regulated areas if the trader doesn’t abide by a decision they will be expelled from the scheme. The rate for non compliance is very low.

ADR scheme Year No. Reason for expulsion
The Motor Ombudsman 2016 3 2 Non-cooperation with scheme, 1 with outcome
The Motor Ombudsman 2015 8 Non-cooperation with scheme
The Furniture Ombudsman 2016 0 N/A
The Furniture Ombudsman 2017 1 Non compliance

There are however issues with compliance in the aviation sector, particularly with AviationADR members. See more details in More Ombudsman Omnishambles and Landing in Court with Ryanair.

5) There are lots of people who have gone to court when not happy with Ombudsman decision

If the Ombudsman doesn’t see in your favour it doesn’t necessarily mean it is wrong. It could be that you didn’t provide enough evidence and the same could happen in court. See Energy ombudsman shows how to keep heat on your supplier for an article from the Energy Ombudsman on how best to present your case.

The court option always remains open to you. But actually very few people do this. An ombudsman will usually be open to looking again at any case if you have more evidence. A judge can only look at evidence. There are cases where people go to the Small Claims Court, but often these don’t get reported accurately in the media which is misleading. For example, one recent case was reported in the media as the judge seeing in favour of the consumer where the ombudsman hadn’t. Actually it was because the trader didn’t attend and so a default judgement was made.

There are issues with ADR

Yup. Not a myth!

Westminster Business Forum seminar Next steps for consumer protection in the UK – dispute processes, enforcement and the consumer markets green paper. 15/11/18 Alternative Dispute Resolution – approval and oversight in the loosest possible sense of the words…

 

Alternative Dispute Resolution - approval and oversight in the loosest sense of the words...

 

There are many issues regarding ADR and Ombudsmen providers. These are to do with the oversight by the approval bodies. See Government and regulators continue to fail on resolving consumer disputes and Landing in Court with Ryanair. These articles include links to reports (Ombudsman Omnishambles and More Ombudsman Omnishambles in particular). They also link to articles from Which? and The Independent that describe a number of problems which are not the fault of providers and provide  warnings about one provider, Consumer Dispute Resolution Limited run by Dean Dunham which runs RetailADR, UtitlitiesADR and AviationADR.

 

man talking to couple