A year after the collapse of travel firm XL, 10,000 customers are still waiting for refunds.

Many find themselves stuck in a deadlock between the Civil Aviation Authority and credit card operators, both of which are supposed to protect consumers whose holidays fall through, while some customers have not yet received refunds because of difficulties in proving how much they paid for their holiday.

The XL Leisure Group collapsed last September, when it was the third largest travel group in the UK. The company was covered by the Civil Aviation Authority’s Air Travel Organisers’ Licensing (ATOL) scheme, through which customers were advised to seek compensation.

CAA said it settled 55,234 claims with XL customers last month, worth £37.5 million altogether. However, 9,778 are still waiting for compensation.

“There is a huge failing in the system given that a year later people are still waiting for their money,” says Rochelle Turner, head of research at Which? Holiday. “The current system is failing consumers. Something needs to be done urgently.”

In most instances, when somebody pays for a holiday by credit card which is later cancelled by the holiday firm, their credit card company will foot the bill, so long as it is over £100. Those who do not pay by credit card can receive compensation through ATOL.

Credit card companies and tour operators usually sign an agreement that ATOL will share financial liability if a tour operator fails. However, in the case of XL there was no such agreement.

ATOL told customers who paid by credit card that their lender was liable. However, a number of credit card companies disputed this.

“We have been battling this issue for six months,” says Sandra Quinn, of the UK Payments Association. “There is an agreement between us and the CAA to ensure customers are not passed from pillar to post, but it seems that’s what’s happening”.

What is more, some customers have been unable to prove how much they paid XL for their holidays. Many customers who are still waiting for payments made bookings with XL’s Freedom Flights division. In order to receive compensation from the CAA through its ATOL bond they must prove how much they paid. But because many travel agents sold the flights alongside accommodation from a different provider, they did not always produce a separate receipt detailing the cost of the flight.

A CAA spokesman said this had “created difficulties”. He added: “our priority is to settle the remaining claims as quickly as possible”.

This entry was posted on Monday, October 5th, 2009 at 8:35 am and is filed under Credit Cards, Travel Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.