Festivals Seek To Tap Bloated Quebec Travel Compensation Fund

Open Jaw

Known as FICAV, the compensation fund for customers of travel agents in Quebec has now reached the startling balance of $125 million. Even more surprising, the fund rarely spends much on compensation.

Under current legislation, FICAV funds cannot be used for any other purpose than traveller compensation, but a group representing 28 major festivals in the province would like to get its hands on some of it.

Festival association REMI is interested in using some of the money collected over the years by the Quebec consumer protection office (OPC) through FICAV. The funds would be used for international promotion of Quebec as a destination.

FICAV is administered by the OPC. Unlike the Ontario travel compensation fund, Quebec employs a consumer-pay model, wherein travellers pay $1 for every $1,000 of services purchased through a Quebec-licensed travel agency.

The Association des Agents de Voyages du Québec (AAVQ) and the Association des tour opérateurs du Québec (ATOQ) say they support the goal of FICAV, but they also point out that it has not been put to use as was originally intended.

Over the years, it has mostly been credit card companies which have refunded consumers eligible for compensation. With some 80 to 85% of travel purchased via credit cards, FICAV is rarely used. Observers say this is just fine with OPC, which recommends that consumers go to their credit card companies first when seeking compensation.

But ATOQ says the practice of letting credit card companies foot the bill has had a negative financial impact on tour operators, agencies and consumers. The association says the situation is leading credit card companies to demand ever-higher financial guarantees and astronomical merchant fees from travel agents. And at the end of the day the consumer pays the price, ATOQ says.

Credit card companies have been pressing the OPC for years to revise its practices and allow them to seek refunds from FICAV for the sums they have reimbursed to consumers. There are no signs of resolution on the issue.

For Transat, the country's largest receptive operator, the idea of using excess FICAV funds to promote tourism in the province is not out of the question, but it says before that could happen a number of conditions should be met.

The vertically-integrated travel giant says the government must ensure that FICAV is used for its intended purpose, says Transat CEO Jean-Marc Eustache. Like ATOQ, he points to the ongoing negotiations with the OPC to permit credit card companies to have access to the fund.

“FICAV is simply not used for what it was intended to do, which is ultimately to act as the first payer. Without an adequate ruling on this matter, no quick decision should be made concerning the future of the fund," Eustache says.

The Transat CEO says the provincial government, in tandem with the industry, must determine a minimum amount FICAV should be maintained at in order to fulfill its mission. In Ontario, where the travel industry rather than the consumer pays for the fund, TICO has set a figure of $25 million for an appropriate Compensation Fund balance.

“Should the law permit it and if the occasion arises, only the excess amounts should be utilized to promote Quebec as a tourism destination, internationally," Eustache says.

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