TICO's Funding Framework & Fee Review: What We Heard
Over the past year, TICO conducted a funding framework and fee review.
Our goal was to develop a fair and modern funding model that reflects cost recovery, delivers value to stakeholders, and continues to keep consumer protection at the forefront.
On October 5, 2023, TICO shared its five proposals and launched a five-week industry consultation.
We invited all registrants, industry associations and other stakeholders to provide their input on TICO’s proposed funding model and fee changes through in-person and virtual focus groups, one-on-one interviews and an online survey.
While visibility of TICO’s information was high – the consultation website page received more than 2,250 hits, trade media published more than 20 articles and open rates on TICO’s e-blasts to registrants were high – we found participation in the consultation process to be limited and we were hoping for more participation.
What we heard: While feedback on TICO’s proposals was generally favourable, we also heard important feedback about how the proposed changes may impact Ontario’s travel agencies and tour operators.
Proposal #1 - Decrease Compensation Fund payments to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales.
- The majority of consultation participants were in favour of this proposal and indicated that re-aligning Compensation Fund assessments and registration renewal fees enhances transparency in how fees are used.
- There was acknowledgement that a third-party actuary study supported a lower fee rate based on historical consumer claims, experience and assumptions related to future consumer claims.
Proposal #2 - Remove non-contributing end-supplier coverage (airlines and cruise lines) from the Compensation Fund, subject to government consideration and decision-making.
- The majority of consultation participants were in favour of this proposal as airlines and cruise lines don’t contribute into the Compensation Fund and TICO does not have regulatory tools to oversee their operations.
- Registrants who specialize in air only or cruise only sales would like to see those sales removed from Ontario Gross Sales when calculating Compensation Fund assessments, as their consumers would no longer benefit from the Compensation Fund should an airline or cruise line failure take place, if government proceeds with this recommendation.
- A minority of registrants expressed that they view this proposal as a reduction in consumer protection
Proposal #3 - Double the maximum Compensation Fund payment per person to $10,000 from $5,000 for consumers, subject to government consideration and decision-making.
- Registrants who participated in a focus group or a one-on-one session were largely in favour of this proposal, indicating that the price of travel has increased substantially and this increase in consumer coverage would be in-line with today’s travel costs.
- On the flip side, registrants who completed the online survey had mixed views, with 40% in favour of the proposal, 40% against and 20% remaining neutral. Some of the comments indicated overall dissatisfaction with the Compensation Fund and concerns that if a large failure were to occur, consumers would receive ‘pennies of the dollar.’ It should be noted that in the history of the Compensation Fund, claims have never come close to reaching maximum event caps.
Proposal #4 - Recalibrate registrant renewal fees, with modernized and more equitable fee bands.
Feedback generally centered around two themes:
1. We heard from smaller registrants that increasing the minimum renewal payment from $300 to $750 is a substantial increase.
- TICO gave significant consideration after the consultation process to the lowest fee band threshold and payment. Any decreases to the lowest fee band threshold would need to be offset by corresponding increases to other fee bands. Additionally, there is a minimum cost to TICO to regulate an entity of any size, which the lowest band of $750 now addresses, and is in-line with regulatory costs in other provinces.
- TICO is committed to re-visiting the lowest fee band at its next fee review in the future.
2. We heard from agencies that focus on corporate travel and agencies that conduct all ‘flow-through’ transactions that the fees should be based on registrant risk.
- TICO is committed to enhancing its risk-based decision-making processes and will consider the potential impact of risk on future fees.
Proposal #5 - Institute late filing fees to encourage timely submission of required documentation and ensure efficient processing.
- Consultation participants overwhelmingly agreed that late filing fees are a reasonable way for TICO to encourage timely submissions and to recoup administrative expenses related to following up with late filers.
Consultation Consideration - TICO asked for registrants’ feedback on a voluntary option to pass TICO regulatory fees onto consumers at the point of sale.
- TICO asked registrants if there is a potential interest to voluntarily pass on to consumers and display registration renewal and/or Compensation Fund fees at the point of sale.
- The overall response was that registrants do not want to pass regulatory fees on to consumers at the point of sale. While TICO’s consultation asked about a voluntary approach, very few registrants mentioned a preference for a legislated consumer pay model.
- Registrants generally thought that a voluntary consumer pay model would be an administrative burden, a competitive disadvantage and would raise consumers’ expectations, or confusion, about what the Compensation Fund covers should something go wrong.
- Travel businesses are competing on a global scale, and it can be difficult to compete with pricing from U.S. suppliers or those located abroad. A few extra dollars on the invoice can make the difference between completing or losing a sale. Extra fees to the consumer would hinder competitiveness.
- For certain types of business models, such as corporate travel or educational travel, contracts with businesses or school boards may prevent any additional fees being added or would need to be re-negotiated/amended; some registrants would simply choose to absorb this cost.
All the feedback heard throughout the consultation has been captured in a report that was submitted to TICO’s Board of Directors and shared with the Minister of Public and Business Service Delivery for information. To learn more about next steps and timelines for the new funding framework, click here.