Revised Guidance for business – Package Travel and Linked Arrangement Regulations 2018

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BEIS have issued a revised version of their now 38-page, 2018 Package Travel and Linked Arrangement Regulation (PTR) Guidance for Businesses. It contains a number of revisions and importantly, from the prospective of managing the typical UK destinations a new interpretation of how and what small operators can “recommend” to potential clients and guests within their locality, without being drawn into and subject to all the provisions of PTR.  Previous guidance essential deemed anything less than a comprehensive listing of all similar local services and, in particular, any specific recommendations for selected local businesses and services as being a linked arrangement, making any such practices, in BEIS’s judgement, subject to the full weight of the regulation

In normal circumstances I’d be recommending that the news of this important change be circulated widely. However, for various reasons the PTR has become increasingly politically contentious.  Elements of the PTR, as it is said to apply to small business, have been very much in the news in recent months and used by Ministers to help evidence the perceived “absurdities” of EU regulation. The PTR as one of many pieces of EU inspired legislation that is/was already under review by the Johnson administration and in all probability, it will now be even more so under the future leadership. Not least because both remaining candidates are promising robust action to revise or eliminate regulation in general and EU inspired regulations in particular.

As a consequence, there is a distinct possibility that if you/we simple promote the new guidance it will prompt all manner of both rational and irrational questions about how and why it has been reviewed and republished, particularly when in parallel Government and senior politicians have been making high profile comment that might reasonable be taken to suggest that some or all of the PTR and much else besides were about to be ditched.  I am therefore setting out some of the wider context to help you to decide if and how you might notify local businesses of these changes and give some of the background and thoughts to help answer any questions that might be prompted if you choose to do so. 

A critical question for all of us at the outset and one I haven’t been able to answer for myself is: to what degree have business simply got on and promoted only a selected listings of local business and by inference recommending some above others, and/or made specific recommendations for favoured local businesses already, either ignoring (the now erroneous) earlier guidance around recommendation or in blissful ignorance of it? The key question arising from that is: will circuiting the new guidance actually make a true difference to sufficient, smaller businesses in the locality to warrant the potential faff involved? The alternative view, and the one that has prompted this note is that regardless, this it is an important document and one that local businesses need to be aware of and act upon, until such times as the PTR under goes major revision or is even abolished. The critical assumptions here being that even with all the hype around PTR and EU legislation is that is likely to be many months, if not a year or years away and time wasted now, could equal missed much needed opportunities to maintain or grow business, in what are very challenging times?

The background as I see it:

In late July BEIS issued a new version of its guidance for business on the 2018 Package Travel and Linked Arrangements Regulations (PTR) first issued on its adoption into UK law in 2018.  It explains the purposes of PTR and its application across the UK and gives examples (hypothetical case studies) to illustrate how the Government believes the regulation may or may not apply in the UK, under what circumstances. It also making it clear that in the UK it is ultimately for the courts to interpret the meaning and application of any regulation (judicial president). As a result, the guidance necessarily, from a BEIS perspective, advises that the guidance should always be read alongside the regulation itself and that if in any doubt about whether a proposed or actual course of action fall within or without the regulation, seek legal advice.

Some might think that with those caveats attached the guidance is guidance only in loosest of sense? In reality, the guidance is the best that the UK regulation and our system of interpretation and application of regulation, wherever it originates from, currently allows. Moreover, if the official guidance is followed to the letter, it should give sufficient defence and justification (morally and legally) for most businesses to feel comfortable enough to proceed as guided. Unlike BEIS, I can say this, but then again please don’t hold me liable if things go wrong, because of course only the courts can make the final decision about how the regulation applies, in what circumstance and not me, you or anyone else!

Admittedly the reason this note is being written is largely because an important piece of earlier guidance was subsequently thought to be wrong. However, it was wrong in that it was overzealous in its interpretation and therefore unlikely to result in any consumer based legal challenge. If the guidance was wrong in the other direction and it had been followed, that would at the very least still be strong mitigation again censor, albeit not necessarily protection against potential, unwelcome litigation.  It is also important (vital?) to note the principal of de minimis; a legal exclusionary tool used to dismiss trivial matters, technical breaches and small sums or unimportant issues from litigation. Applying the principle it is unlikely but not impossible that any argument over an SME occasionally offering say a round of golf with a night in hotel room without procuring bonding or similar financial protection, or a dispute over who is then responsible for the relatively modest costs of rectifying a major failure to deliver that golf booking would end up in court.  If it ever does, it isn’t necessarily going to lead to prosecution and/or serious penalty.  This too is of course just opinion, not facts until tested and proven to be the case in court.

The UK method of interpretation and the use of “guidance”, unless or until case law is established, works reasonably well for those areas and issues central to the original intent of any regulation. Essentially in this case: longer, relatively expensive, usually overseas package holiday bough, well in advance and involving several major components provided by multiple business but sold as one, or a number of linked items by a single organisation.  For good practical reason there are far more uncertainties involved and it consequently becomes far less helpful the nearer to the fringes that you get.

The fringes are precisely where all the Micro, SME and small services issues sit, for example a night in the guesthouse with the taxi to and from the remote rural station arranged for you, a meal at the local pub as part of your stay, or arranging tickets to some event or attraction to assist your guest’s stay.  Critically, if at the fringes, the practice is deemed to fall within the regulation, then by default similar duties and responsibilities, together with exactly the same type of measures to protect customers’ payment, via independent third-party retention of monies paid until the package is complete, bonding arrangements or insurance arrangements, apply as much to a micro business as they do to any major international corporation.  Many think that this is a bit of a nonsense and not, as far as anyone can yet establish, within the intent, let alone the spirit of the original EU regulation. 

The intended or unintended convergence of seemingly trifling service provisions and potential onerous responsibilities and large compliance costs is the nub of the PTR’s problems, not its core intent of offering large numbers of consumers protection from known large scale risk. Concurrently, most of the real instances and indeed the practical implications of BEIS’s hypothetical case studies combined, create the patently absurd situations that are regularly cited.  For example, case studies 6 and 7 at page 8 when read together, as colleagues in the Tourism Alliance points out, means for all practical purposes that: “If a person books a stay at a spa hotel and undertakes treatments when they are there, that is not a package – but if they book the treatments when they book the stay, that is”.  How does that genuinely help the consumer or protect them from realistic risk?  How does it encourage good business practice, innovation, cooperation and improve the ease and transparency of purchase?

The UK approach to interpreting regulation also unintentionally creates most if not all of the “absurdities” of the application of “EU laws” recently cited by politicians and the media. But equally it is the consequence of the absurdity of a situation where, when questioned on most aspects of the application to small domestic businesses in the UK, the EU Commission will, in all honesty, say that the UK’s suggested interpretation (guidance) and therefore its application goes well beyond the Commission’s original intent.  Quite rightly they will also point out that this is entirely a UK decision and their business to interpret and apply the regulations as they see fit, not the EU’s.  At the same time the UK Government are saying but this is how we think the EU regulation should or should not apply here in the UK but we can’t guarantee it unless and until someone tests this, EU inspired, UK law in a UK court. The inference of the latter seemingly being that this is the EU and EU regulation’s fault, not the UK’s problem. A problem that was arguably was in the UK’s gift to avoided in the first instance and/or in its powers to rectify ever since, if only the UK had some sensible means of interpreting or setting the boundaries of regulation, other than the ongoing threat of and eventual but not guaranteed, recourse to litigation to set them for us?

Arguably there is a solution: the de minimis principle, most commonly used and widely understood as it applied to EU state aid, now UK subsidy control.  This could be used to explicitly exclude transactions, businesses by turnover, employer numbers and/or defined activities etc. below a certain scale from inclusion within the regulation. If set at the correct levels this wouldn’t necessarily deny consumers protection from identifiable levels of unreasonable risk or stop consumers recovering lost payments, where businesses deliberately or accidentally shirked there normally accepted responsibilities for putting things right that have gone wrong. It might for example, by a small claims court action, rather than a full-blown court action under PTR? Nonetheless, there is redress available and arguably ones that are more proportionate to the level of risk and potential losses involved at what is currently on the fringes of the application PTR in the UK.  

In recent months the Minister for Brexit Opportunities (Jacob Rees-Mogg) explicitly cited the PTR and the perceived need for small business to have expensive consumers financial protection in place to be able to offer minor third-party services, as one of many reasons for the need for a wider “bonfire of EU regulation”.  Originally proposed as a 5-year sunset clause unless action is taken to preserve some or all elements of existing EU originated regulation, his proposals have now been put on hold until a new PM is in place.  In the interim the two remaining candidates for the PM’s post are suggesting, ever more robust approaches to all EU legislation (actually all regulation, full stop) than that originally proposed by the Minister. Essentially this means that the PTR will almost certainly be revised but hopefully not removed in its entirety. Unfortunately, it is currently anyone’s guess as to when that might start to happen.  The only certainty is that it will not now be during the current 2022 main or shoulder season and may take some (considerable?) time beyond that to implement.

In the meantime, and linked only by the fact that ongoing tourism industry lobbying for changes to the PTR, as it impacts on small domestic businesses, combined with active Ministerial interest in EU regulations, BEIS officials have had cause to look again, in some detail, at their original guidance and presumably realised that some of the earlier interpretation might have been overzealous, or just plain wrong? In the circumstances BEIS have rightly decided to issue their revised guidance and correct any errors or misinterpretation immediately. To do anything else would have been wrong.  That new guidance will now apply until any changes to PTR itself come in to force, which at the very earliest might be for the start of the 2023 season but using standard projections for Parliamentary business, could be much later, possibly even into 2024 or beyond? 

In the interim, now armed with this new guidance could and should many more small businesses be making potential gains and adding value to their product via the inclusion of specific recommendations for particular things to do and places to go in their locality? If more accommodation business did proactively recommend, would that generate additional business not just for those recommending it but for those being recommended? Both seem plausible. Assuming of course many businesses haven’t already been doing so, either in contravention, or blissful ignorance of the original guidance.

While focusing on the issue at the fringes let not forget the core intent which could inadvertently be under threat itself?  The EU, PTR originated in 1992. The latest 2018 revision added the concept of linked package arrangements, that the UK Government where still obliged to apply under transitional BREXIT arrangements. The PTR remains an important and, most would I hope agree, a necessary piece of legislation. Lest we forget: the PTR was designed to protect consumers, set standards for information and communication, assign clear responsibilities for addressing problems and ensure financial liabilities are covered in the event of major failures and it did so, at the time in the face of wide spread, regular abuse and business failures, often on an industrial scale. The linked travel arrangements (LTAs) were added to stop existing and new operators dodging the rightful aims of PTR via deliberately amended business practices or through the use of new and emerging technology. Hopefully the value of 99% plus of the PTR as a critical piece of consumer protection is properly understood by all?

That value is well articulated and evidenced within and by the following section taken from the introduction to the timely, from a lobby prospective, revision of the BEIS guidance:

Package holidays are unique as they are often complex combinations of travel services which typically include transport and accommodation, and may also include other services, such as excursions and vehicle hire. As various service providers are often involved, a problem with the delivery of one service may affect the delivery of others. The traveller may find it difficult to deal with subcontractors (e.g. due to language barriers) and in such cases may not even have a contract with the various service providers.

Typically, consumers pay large sums, often long in advance of the service being provided, which makes them vulnerable to insolvency. Consumers are generally unaware of the financial stability of holiday providers and can face considerable difficulty in getting a refund from an insolvent company. There is also a risk that holidaymakers will be stranded far from home should their travel organiser collapse.

2018 PTRs provide important protection for travellers to cover the unique characteristics of package holidays. Key protections include:

o Making the organiser liable for the performance of the travel services making up the package (even if performed by third parties; the organiser may seek redress from third party suppliers under regulation 29).

o Protection against the insolvency of package organisers, ensuring travellers are refunded, or where applicable, repatriated should the organiser go bust.

o Detailed information requirements that make it clear what product the traveller is buying and the associated protections.

There are a number of other useful reference in the guidance which is worth reading in full at your leisure.  The specific new case study regarding recommendation, can be found at page 30. Please note it is as much if not more about what it no longer says than about what it now says. It now states:

Case Study 3: A traveller books accommodation on a B&B website. Having done that the traveller clicks through to a page on the B&B’s website called “Local Attractions”. Here, the B&B owner has listed a number of recommended local restaurants, attractions, and ‘things to do’. Inspired by this recommendation, the traveller books tickets to the local theme park. This is neither a package nor a LTA as the B&B owner provided a range of useful information (rather than encouraging the traveller to book in a targeted manner).

Finally it is important to note that the new guidance still falls well short of the (our) aim of encouraging, let alone enabling small businesses to proactively partner with other local businesses to add value to their combined offers via loose “packaging”, without it falling under the onerous provision of the PTR that are clearly intended for large businesses and the packaging of major, high value components of a typical commercially, usually overseas, packaged holiday, as rather neatly illustrated by the introduction to the BEIS guidance reproduced above.  The last sentence of the new case study regrettably reinforces the point that organising or even actively encouraging booking of third-party product is in BEIS judgement still very much subject to the full weight of the regulation.

The aim to exempt smaller value, smaller services, provided by smaller local businesses operating in the predominantly domestic market, which we and many others have been lobbying for via the Tourism Alliance, will hopefully now be achieved by the means of a sensible and measures review, leading to a revision of parts of the PTR and not its abolition.  Some form of significant change is now far more likely to happen than not.  It is now just how successfully, how broadly based and by when it might be implemented that is still in doubt. In the near future we may find ourselves in the unexpected position of having to fight to try to retain much of the PTR in order to retain the UK’s competitiveness, rather than battling for relatively minor revisions aimed at aiding the many small, mainly domestic market focused providers.

The revised 2018 PTR Guidance for businesses can be accessed at:

The package Travel and Linked Arrangements Regulations 2018 guidance for businesses (publishing.service.gov.uk)

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