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The following is issued on behalf of the Travel Industry Compensation Fund Management Board:
The Travel Industry Compensation Fund Management Board today (March 13) launched a consultation on the Travel Industry Compensation Fund, inviting views from the public on proposals to introduce a mechanism to adjust the levy contribution to the fund and enhance traveller protection.
Speaking at a press conference, the chairman of the board, Mr Chan Tze-ching, said, ：The fund was established in 1993 under the Travel Agents Ordinance (TAO) (Chapter 218) to provide ex gratia payments to outbound travellers joining package tours against default of travel agents. Its scope was further expanded in 1996 to cover ex gratia payments to outbound travellers who died or were injured in accidents while travelling abroad on package tours.
：The board, which is responsible for holding, managing and applying the fund, considers that now is an appropriate time to review whether a mechanism for suspending and resuming collection of the fund levy should be established and whether there is scope to enhance the fund・s protection to travellers and reduce the burden of levy contribution on travel agents.；
Mr Chan said that the consultation paper covered four proposals:
(a) Putting in place a mechanism with triggering thresholds to suspend or resume the collection of fund levy;
(b) Reducing the fund levy rate to zero;
(c) Increasing ex gratia payments to outbound travellers; and
(d) Allowing outbound travellers to make advance authorisation before departure.
：On the basis of professional actuarial findings, the board proposes to set the prudent level of the fund at $400 million, and allow a buffer representing about 25% of the balance at a prudent level - $100 million - to set the buffer level of the fund at $500 million.
：When the balance of the fund reaches $500 million, the board will recommend suspending collection of the fund levy and when the fund drops below $400 million, the board will recommend resuming the levy collection,； Mr Chan said.
：The introduction of such a mechanism would help enhance the transparency of the fund levy setting process and allow a predictable and timely response to market changes based on objective criteria.
：The board would conduct regular reviews of the prudent level of the fund with a view to recommending adjustments to the triggering thresholds as and when necessary. The frequency of reviews should be no less than once every three years,； he said.
Based on the proposed adjustment mechanism, Mr Chan said the board recommended that the fund levy rate be reduced to zero for the time being, while it was also mindful that the recent global financial turmoil and its as yet unclear impact on the economy might make it difficult to predict accurately the demands on the fund.
The board took the view that suspending collection of the fund levy would help lower the operating costs of travel agents amid the financial crisis and might result in lower package tour fares.
To enhance protection to travellers, the board, having considered the financial position of the fund and other relevant factors, proposed to increase the ex gratia payment ceilings in relation to both the funeral, cremation or repatriation of the remains of a deceased outbound traveller and compassionate visits by the relatives of an injured or deceased traveller from $40,000 to $100,000.
The board also suggested introducing an arrangement where travellers could make advance authorisation before departure on outbound package tours to enable their authorised representatives to apply for ex gratia payments if needed.
：In finalising our proposals on the way forward, the board will take into account the views put forth by both the public and the trade during the consultation,； Mr Chan said.
Members of the public are invited to send their views and suggestions to the board in writing at Room 4901, 49/F, Hopewell Centre, 183 Queen・s Road East, Wan Chai, by email to enquiry@ticf.org.hk or by facsimile at 2521 8829. The consultation will start today and continue until April 30.
Copies of the consultation document can be collected from the board secretariat. The full text of the document is also available on the board・s website (www.ticf.org.hk).
Ends/Friday, March 13, 2009
Issued at HKT 16:17
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