Under EU law, travel agencies must reimburse customers within 14 days if their stay is canceled.
However, it is now proposed that credit notes be offered as a “short-term alternative” to cash reimbursements due to the flood of demands caused by the pandemic.
It comes after the FCO has updated its warning, advising against non-essential travel, from 30 days to an indefinite period.
Many travel agencies will not be able to survive the crisis if they are forced to reimburse immediately in cash, according to the Association of British Travel Agents (Abta).
This is due in part to a delay in reimbursing money from airlines and hotels.
Countries like France, Italy, Belgium, Spain, Germany, the Netherlands and Denmark have already temporarily changed their reimbursement rules in the context of the pandemic.
And now Abta says that the UK must take similar action.
They say that the refund credit notes could be exchanged for another booking – or a full cash refund at a later date.
All credit would be financially protected, ensuring the safety of consumers’ money.
The government is currently the backer of Atol’s main holiday protection and compensation program.
Abta warned that if the UK does not change its policy, companies will go bankrupt, leaving the government with bills up to £ 4.5 billion to reimburse customers.
Mark Tanzer, CEO of Abta, said: “We know the government has a lot to deal with the current crisis, but its failure to make these temporary changes to the reimbursement rules defies logic and leaves the consumer in a no man’s land.
“The rules for 14-day refunds were never designed for mass vacation cancellations, which we are seeing as a result of government action to contain the pandemic.
“It is in no one’s interest for normally healthy and viable businesses to go bankrupt.
“Hundreds of thousands of jobs are at risk and the UK taxpayer will have to foot the bill for reimbursements to customers if the industry-wide travel industry collapses.
“It is important to reiterate, this is about supporting businesses through an entirely unpredictable and short-term cash crisis – customers will not lose their right to a refund and their money is not in danger. “