The Office of Fair Trading (OFT) has warned the UK's four major tour operators that it is prepared to start legal action against them to obtain information about cancellation charges.

Thomson Holidays, Airtours, JMC Holidays and First Choice have been given 14 days to comply with a request for financial data.

But they have so far refused to supply information for the investigation into package holiday cancellation charges.

John Vickers, OFT director general, said: “There are serious questions about cancellation charges for package holidays sold in the UK. We are determined to get the relevant data and will take court action if necessary.”

The OFT is investigating whether cancellation charges are unfair, and has asked the companies to explain the financial basis on which they are calculated.

Typically, charges vary from 50% of the total cost of the holiday if it is cancelled 22 to 56 days before departure, and up to 100% if cancelled seven days or closer to the departure date.

A spokesman for travel insurer Club Direct said: “When there is a 100% charge, tour operators are in a position to make money from insurers, because they keep the excess and can also re-sell the package holiday.”