Court Documents Reveal More TICO Incompetence
and Lack of Understanding of Bankruptcy Laws
TICO Rides Roughshod Over Majority Wishes
of Registrants for Restructuring
and TICO Inaccurately States Survey Results
Redefining Travel Services to Wreak Havoc
on Agent Systems and Workflows
TICO Proposes 20% Increase in Renewal Fees
Toronto, 04 April 2011: Canada's Association of Retail Travel Agents (ARTA Canada) expressed outrage today as more revelations unfolded about TICO's handling of the Conquest Vacations failure. Documents obtained from the Bankruptcy Trustee and the Ontario Superior Court of Justice in Bankruptcy paint a shocking picture of TICO's utter incompetence, having failed to insure that Conquest was properly scrutinized, when months before the bankruptcy TICO knew of Conquest's financial difficulties.
Conquest Did Not Have Valid Trust Accounts and TICO Knew It
While TICO continued to maintain that Conquest was "on side" with its trust accounts, the documents reveal otherwise, including TICO's own admission that it could not produce any copies of required trust account agreements. More importantly, in its appeal to the Court of the decision by the Trustee which denied TICO's "secured claim", TICO admitted that it had erred and not filed the correct type of claim.
Furthermore, while TICO, in a press release stated that the Court denied TICO's claim on Conquest's trust accounts due to co-mingling of funds and the "extent that the consumer funds were no longer identifiable", TICO actually told the Court that the funds were completely identifiable through bank records and computer records which enabled such identification. However, TICO failed to tell the industry and admit in its press statement that, in fact, the "extent" of co-mingling of funds in a trust account was not a factor in validating a trust, but rather that any co-mingling of funds is fatal to the existence of a valid trust in accordance with the Bankruptcy and Insolvency Act (BIA). When TICO's legal counsel was asked by the Court to direct the Court to even a single case to show precedence and support for TICO's arguments, TICO could not do so.
Moreover, TICO failed to tell the industry that, according to the Bankruptcy Trustee, TICO had filed an appeal against the Court's decision, but abandoned it.
It seems clear that TICO's general trust accounting rules are a hodge-podge of good intentions, but in practice would likely never establish a true trust account in any bankruptcy proceeding. TICO has been long-criticized for failing to enact trust account reforms and for turning a blind eye when various parties dip into registrant trust accounts to automatically debit various monies claimed to be owed. TICO has been fully aware that trust accounts have never been "pure" with monies shifted from these accounts to operating accounts for any number of reasons. The end result of this trust account debacle is that registrants are now on the hook to finance some $1 million in claims which should have come from a properly impressed trust account maintained by Conquest.
TICO Ignores Majority Wishes of Registrants to Restructure Board
As for TICO's pronouncement last week that it will not restructure its board of directors having previously committed to the industry to be responsive to the wishes of registrants in structuring a more democratically-composed board, ARTA Canada is anything but surprised. However, what is surprising is how TICO has inaccurately reported results of its registrant survey. TICO stated that 37% preferred the current Board structure and 24.8% preferred a fully elected Board, with approximately 31.1% preferring something in between these two options.
The actual results were an overwhelming majority of respondents (63%) favouring some alternative structure, with 56% of those respondents proposing to double the elected industry board members (18.9% of respondents) or triple the elected industry board members (12.2% of respondents) or fully elect the industry board members (24.8% of respondents) of TICO.
TICO states that it favours "the association model" and feels that it's "democratic". However, ARTA Canada maintains that the only thing the model does is perpetuate a protectionist approach to continuing the appointment of an ACTA member-dominated board which has done little to advance a balanced approach to governing TICO. Clear evidence of the lack of any equity in appointing the current TICO board are the three seats afforded to the Canadian Association of Tour Operators (CATO), which has only 31 members (many of which collectively share only one TICO registration), and yet gets to appoint three seats to the TICO board. CATO appears to exist in name only and with no apparent activity, press releases, or any other reason to exist other than hold TICO board seats. Its web site has been stale for 15 months and even before then showed virtually no activity. Whatever CATO may have been in the past, it is certainly no longer as such.
New "Travel Services" Definition Creates Invoicing and Disclosure Chaos
Adding insult to injury and underscoring TICO's clear failure to adequately consult with its registrants, TICO now admits that the finally-approved revision of the "travel services" definition will likely cause retailers various problems. Registrants will recall that ARTA Canada raised this matter at the last TICO AGM in November 2010, however, TICO stated it was "surprised" to learn of the Ontario Government's intent to make such changes, a fact which ARTA Canada found hard to believe. TICO could offer no explanation as to why the proposed changes were being considered, and now it is clear why. Rather than admitting that it failed to consult with the industry to determine the impact of the new definition, TICO continued its usual barging forward with regulations which often make travel agency processes nearly impossible to fit to requirements. Invoicing and other documentation rules are proof positive that TICO is completely insensitive to the way travel agents manage the procedural side of agency operations, and now we see it again in the change to travel services.
Under the new definition which received Royal Assent on 30 March 2011, “travel services” will now mean “transportation or sleeping accommodation for the use of a traveller, tourist or sightseer or other services combined with that transportation or sleeping accommodation”. Therefore, services not specifically combined with or part of such transportation or lodging would no longer be included in contribution calculations to the compensation fund nor covered in claims on the fund. From a practical point of view any other ancillary or other services which are not part of a package or all-inclusive tour, including various à la carte purchases, are no longer travel services as such. Even if agents were to go through the costly, time-consuming, and awkward process, if at all possible, of breaking out such services from their fund calculations, the disclosure and invoicing requirements stating that these items are no longer covered by the fund will be nearly impossible to comply with.
TICO Wants 20% Higher Renewal Fees
As if this were not enough, TICO has now proposed a 20% increase in renewal fees, ranging from $50 up to $300, effective 01 July 2011. However, while TICO has invited comments from stakeholders on the proposed increase, TICO's dismal track record of listening to and acting upon the sentiments of its registrants should be taken as just another holding out of false hope that it will do anything other than follow-through with its plans.
"If there is one thing that ARTA Canada has learned about TICO, it's that the only hope registrants have for a fairer shake from this rogue regulator and its ACTA-dominated board is a change in the leadership in the Ontario Government. Consultation with TICO is simply pointless", said ARTA Canada President Bruce Bishins, CTC.
About ARTA Canada
ARTA Canada is the largest non-profit federally incorporated professional association of travel retailers in Canada, the members of which consist exclusively of travel agencies and travel agents. In addition to advocating fair and equitable treatment of travel consumers, ARTA Canada represents the commercial and strategic interests of its member travel agencies and travel agents in a variety of national and provincial domains including regulatory and legislative matters, automation, technology, sales and marketing, and distribution.
ARTA Canada is the strategic partner in Canada of the U.S.-based Association of Retail Travel Agents (ARTA). For complete details about ARTA Canada's new $99 membership campaign or to join ARTA Canada, including secure payment on our web site, please visit www.artacanada.ca/join.