Deadline of February 2007 set for industry to submit views

The Treasury will begin a consultation period with the industry to discuss whether to expand the FSA remit to include travel agents and tour operators.

It follows calls from Ed Balls, economic secretary to the Treasury, for evidence to be presented to the government about the extent of mis-selling of insurance in the travel sector.

Balls' announcement was followed by a Treasury statement, which said the review would start with a call for evidence and widespread consultation. The Treasury has set a deadline of February 2007 for all interested parties to submit their views.

Balls said: "In recent years there have been growing concerns from consumer groups and sections of the industry

that the market is not working as well as it could.

"We therefore need to get to the bottom of whether travel insurance sold with a holiday is being mis-sold, and whether we need to be doing more to educate consumers to consider the cover they want and ensure that they are properly informed."

Insurance Times has learned that Biba is preparing to conduct a survey of consumer experiences of buying insurance from tour operators.

One source close to Biba said: "There is a view that the FSA cares about the consumer, and if Biba can show consumer detriment in the travel sector it can show that there needs to be some form of legislation."

Graeme Trudgill, technical manager at Biba, added: "We are heavily involved in this debate. We are putting together a formal response and will be doing a lot of research into consumer detriment to be presented to the government."

Holiday Travel Watch (HTW), the body established to support consumer complaints against the travel industry, this week supported calls for regulation of the sector and slammed the Association of British Travel Agents (Abta) as being a "tiger without teeth".

Abta's 1,600 members are required to comply with its code when selling insurance, but a mystery shopping exercise by HTW revealed serious flaws in compliance levels.

Frank Brehany, managing director of HTW, said: "It is incredible that in the 21st century there are so many companies working to different standards. There are discrepancies and policies are not adequately explained."