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Wednesday,  April 17, 2024 7:03 PM 

Ontario Auditor General report “paints a bleak picture” of TICO, says CATO

Ontario Auditor General report “paints a bleak picture” of TICO, says CATO
Jean Hébert, CATO’s executive director. (File photo/supplied)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

The Canadian Association of Tour Operators (CATO) says it will continue to promote a more effective traveller protection system after the Office of the Auditor General of Ontario (OAGO) cited "significant concerns" in a value-for-money audit of the Travel Industry Council of Ontario (TICO) last week.

“We can be optimistic, but we also need to be realistic about the next steps,” wrote CATO’s Executive Director, Jean Hébert, in a statement to media on Friday (Dec. 8), saying the audit “paints a bleak picture” of TICO.

In its 51-page report, Ontario’ Auditor General made 16 recommendations, adding that while the travel industry has changed significantly since 1997, TICO’s structure and responsibilities “have remained largely unchanged.”

The report also addresses the long-contentious Compensation Fund, claiming that TICO’s cost to administer the Fund “may outweigh the benefits it provides to consumers.”

READ MORE: Ontario Auditor General notes "significant concerns" in TICO audit; Richard Smart, ACTA respond

Over the past ten years, TICO’s registrants booked more than $133 billion in travel services for consumers, the audit says.

Meanwhile, TICO’s estimated annual cost to administer the Compensation Fund for 2022-23 of $1 million is nearly three times more than the average of $350,000 in compensation paid from the Fund to consumers, on average, over the last 10 years, the report notes.

The OAGO also found that TICO, since 1997, used an estimated $31 million from the Fund to cover its own operating costs.

And there are other “significant concerns.”

One is that TICO could not demonstrate the justification for holding as much as $2 million in security deposits from registrants (TICO’s CEO Richard Smart later apologized for this, saying it was a pandemic-related action).

TICO’s CEO Richard Smart. (Pax Global Media/file photo)

The audit also shows that 30 per cent of TICO registrants have not received a compliance inspection in the last 10 years, that the Ministry of Public and Business Service Delivery and TICO have not established a disciplinary process for registrants, among other inefficiencies.

The report concludes that TICO “did not have processes to consistently administer the Travel Industry Act, 2002 effectively” in order to register and regulate travel agents and wholesalers, and to protect consumers when purchasing travel services through a travel agent or wholesaler.

CATO’s next steps

In his statement, Hébert said CATO will continue to call on TICO and the Ontario government to stop placing an unfair and uncompetitive financial burden on travel businesses.

“We create jobs, we provide a positive impact in our economy, but the more fees (taxes) we pay to fund a para-governmental organization, the more it reduces our capacity to invest in the future of our industry,” he wrote.

He said the findings by the OAGO about the Compensation Fund “will require a quick response, once and for all,” based on Ontario’s level of concern for consumer protection.

READ MORE: CATO blasts TICO’s proposed funding model, calls for reforms to Travel Industry Act

If a Compensation Fund is necessary, “it must be fully funded by the travellers and, even maybe, administered independently from TICO,” Hébert wrote.

“Without those improvements, there is currently no value, and we will support its abolishment.”

While the audit is revealing, Hébert still attested to the “high level of professionalism in the TICO organization.”

At what cost?

As for the OAGO’s other recommendations on improving efficiencies at TICO, and giving the Ministry more control of the organization, Hébert has questions – especially around what this will all cost.

Will there be a mandatory code of ethics for registrants and individuals, or a discipline committee, to enforce measures?

Will there be new regulations? A managing travel salesperson? A disciplinary process, or an enforcement and risk-rating system? More inspection to oversee registrants? More data collection, tracking, and monitoring?

A better system for complaints handling? Will there be additional red tape for registrants, including an obligation for businesses to promote TICO by handling their brochures, and explaining TICO’s role?

Hébert believes there will be a cost that the industry “will have to pay for once again.”

Review the Travel Industry Act 

Of all recommendations listed in the audit, CATO particularly supports the call for a more comprehensive review of the Travel Industry Act (TIA), Hébert wrote.

“The ball is not only in TICO’s court,” he wrote, saying it’s also up to the Ontario government to “make the right decision” and “address the real issues once and for all” without band-aid solutions.

“We hope that the OAGO report will be the sparking plug to go in the right direction,” Hébert wrote.

“We still hope, as we have requested on many occasions, to have an opportunity [to have a] conversation with the [Ministry],” he wrote. “This is what [the] government should at least be able to do in a democratic society.”

CATO doesn’t think Ontario should mirror Australia, which repealed its travel seller regulations in 2014 because it determined that due to changes in the travel industry and other existing consumer protections, “they were no longer necessary.”

The association, instead, supports changes that align with a province that’s open for business, and “where the consumer is protected against all forms of wrongdoings,” Hébert said.

“We appreciate the OAGO’s statement related to opportunities to improve efficiency and economies of scale by having a regulator that oversee more industries like other jurisdictions,” Hébert said. “That needs a serious reflection.”

In a news release last week, TICO said it values the audit’s perspective, promising to enhance the way it delivers on its consumer protection mandate.

“Our team is dedicated to addressing the recommendations presented in the report, a number of which are already in progress,” said TICO’s Richard Smart. “We are committed to being transparent and accountable as we share our action plan in the months ahead.”

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