A summary of the protection the scheme provides for customers of TAANZ members.
The Travel Agents' Association of New Zealand Incorporated ("TAANZ") has established a Bonding Scheme which is designed to provide customers with an assurance that if they deal with a TAANZ member they will at least receive some protection against the travel agents' failure to properly account to suppliers or intermediaries for monies received from customers for that purpose.
It is compulsory for every full member of TAANZ to belong to the Bonding Scheme. All full members of TAANZ are therefore TAANZ Bonded Agents. Allied members of TAANZ are suppliers of travel and services and are not involved with the Bonding Scheme.
Because the TAANZ Bonding fund is available to meet claims lodged by customers of every TAANZ member (to a maximum exposure of $250,000.00 for all claims made by the customers of any one defaulting TAANZ member) the Bonding Committee has sought to protect the Fund by specifying that travel agents should meet certain minimum financial criteria in order to be eligible to be a member of TAANZ. The financial performance of every TAANZ member is reviewed at least annually by the TAANZ Bonding Authority and there is provision for a special review to take place at any time if there is concern as to the financial security of a particular member.
In addition the TAANZ Bonding Authority, who is an independent Chartered Accountant, considers the financial structure of each individual member's business, judges the risks involved and determines the level or amount of indemnity required to protect the Bonding Fund in each individual case.
The Bonding Authority invariably requires that each TAANZ member covenant to indemnify the Fund for all claims paid out by the Fund as a result of that member's own default and that the major individual shareholders personally provide some limited indemnity to reimburse the Fund from their own resources for claims paid out by the Fund in relation to the activities of the TAANZ member company that they own. Individual shareholders are required to support their personal covenant with security.
These measures are designed to protect the Bonding Fund. History has shown that they have been reasonably effective in doing this. Both the number of claims on the Bonding Fund and the size of those claims have been comparatively modest.
Application of the Scheme
The TAANZ Bonding Scheme provides members of the public who are retail customers of a TAANZ member with some protection in the event of the TAANZ member failing to properly account to suppliers or intermediaries for monies received from such customers for that purpose, with the result that the customer does not receive the tickets or the services for which he/she/it has paid the TAANZ member.
The scope of the protection provided
The protection provided by the Bonding Scheme is restricted. It applies where the customer does not receive the tickets or benefits for which the customer has paid the TAANZ member on account of the fact that the TAANZ member, although receiving the money from the customer, has not paid the money so received to the agreed supplier or intermediary. It therefore only covers defaults on the part of the travel agent in accounting for moneys received by that travel agent from the customer for the purposes of paying for tickets, accommodation or travel related services for the customer.
The only exception to this arises where a TAANZ member who receives money directly from a customer pays money to another TAANZ member or to an IATA approved agent in circumstances where that other TAANZ member or IATA approved agent is also acting as an agent. In such circumstances the consumer will have a claim on the Bonding Fund for the default of the TAANZ member or IATA approved agent where the consumer suffers loss as a result of the TAANZ member/IATA approved agent failing to pay such money on to its principal.
In such a case the claim on the Fund is in respect of the default of the TAANZ member or IATA approved agent which failed to pay the money on to its principal. The TAANZ member which deals with the customer directly is not in default.
Subject to this one exception, if the TAANZ member pays and applies moneys received from its customer in accordance with the instructions received from its customer, then there can be no claim made by the customer under the Bonding Scheme.
The Bonding Scheme does not guarantee the performance of other suppliers of services or intermediaries. Accordingly, if a hotel, airline, tour operator or other supplier of services goes bankrupt and is unable to perform the services it undertook to perform when it issues or agreed to issue its tickets/vouchers there would be no claim on the Bonding Scheme for such a failure. The TAANZ Bonding Scheme does not purport to guarantee the performance of the suppliers of services purchased through the agency of the TAANZ member.
This is the case even if the supplier of services is a TAANZ member, which, as a tour operator, is acting as a principal in selling a packaged holiday or other travel related product.
If a customer deals with, and pays money to, an intermediary who is not a TAANZ member, but who is in the business of arranging travel, accommodation, or related services (hereinafter referred to as "non TAANZ travel consultant") that customer is not covered by the Bonding Scheme and cannot claim against it. This is so even if the non TAANZ travel consultant subsequently pays money to a TAANZ member for the purpose of purchasing travel and related services for its customers and the TAANZ member fails to apply such money for that purpose, with the result that the tickets/vouchers are not supplied to the non TAANZ travel consultant or its customer. In such a case neither the customer nor the non TAANZ travel consultant would be able to claim against the TAANZ Bonding Fund.
The Bonding Scheme only applies where a customer has direct personal contact with a TAANZ member, the customer pays over his/her/its money directly to the TAANZ member, and either, that same TAANZ member defaults by failing to make payment for the travel services purchased by the customer, or, the TAANZ member pays the moneys to another TAANZ member or an IATA approved agent who, acting as an agent, defaults by failing to make payment to the principals for the travel services purchased by the customer.
The Bonding Scheme only applies to provide protection to customers against the activities of TAANZ members when they are acting in their capacity as travel agents. If a TAANZ member is also acting as a retailer of goods, or other non-travel related products, moneys paid to the TAANZ member for the purchase of such goods or other non-travel related products will not be protected by the TAANZ Bonding Fund. Further, if a TAANZ member (usually a tour operator or a wholesaler) is selling a package holiday which that TAANZ member has put together then it is probable that that TAANZ member is not acting as a travel agent in the transaction in question but rather as a principal selling its own product. In such a case if the TAANZ member acting as a principal fails to deliver its product there will be no claim on the TAANZ Bonding Fund.
Limitations on liability for claims on Bonding Fund
The Bonding Scheme also imposes certain limitations on payment of claims. The most significant are:
(i) The Fund provides a maximum of $250,000 to meet claims made as a result of the failure of any one TAANZ member. Customers should realise that where a member trades through more than one outlet the maximum sum of $250,000 is available spread over all the outlets operated by such member.
The TAANZ Bonding Scheme provides a cap as to the amount it will pay out in relation to the failure to account for money received from customers by any one TAANZ member. That cap is currently set at $250,000. Accordingly, if a TAANZ member makes default in properly accounting for monies received from customers to a total sum of say, $500,000, the members of the public who have suffered loss on account of such default by the TAANZ member will only receive reimbursement from the Bonding Scheme of 50 cents in the dollar, or half of their real loss.
TAANZ has been operating a Bonding Scheme since 1966. To date no TAANZ member has failed in circumstances where the loss to customers has not been paid in full from the Fund. Customers should be aware however that if one of TAANZ's larger members was to default in its obligations it would be anticipated that the total claims would be substantially in excess of the maximum currently payable for default by any one member with the result that customers would not be paid pursuant to the Bonding Scheme the full amount of their loss but would receive instead a pro-rata payment on account of their loss.
(ii)Any claim on the Bonding Fund must be lodged within six months of the date of the default of the member.
Further information and claims
If a customer wishes to receive further information about the Bonding Scheme or wishes to make a claim on the fund for loss sustained as a result of the actions of the TAANZ member with whom they have had direct dealings they should contact the Chief Executive of TAANZ at PO Box 1888, Wellington 6140. Tel: (04) 496-4898. Email firstname.lastname@example.org