Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
The Foreign Package Holidays (Tour Operators and Travel Agents) Order 2001, which revoked an earlier Order of 1998, prohibits marketers from discriminating in holiday offers against customers who do not take out their holiday insurance. CAP understands that it is illegal, for example, to state “10% off this holiday when you take out our holiday insurance”. The legal position on whether it is illegal to offer non-monetary discounts, for example car hire, is unclear but it is likely to be acceptable to offer incentives unconnected to the holiday, for example, retail vouchers. Marketers should take legal advice before offering insurance-related discounts to holiday-makers.
Some travel agents offer holidays that are conditional on taking out their holiday insurance and the requirement is not always stated in the marketing communication. If the requirement is stated, the likely cost of the insurance often is not. This non-disclosure of information causes frustration and annoyance to prospective holiday-makers, particularly if the insurance cost is higher than market rates. In some cases, the cost of the insurance might add 40% or more to the advertised cost of the holiday. The lack of transparency in pricing means that consumers cannot make meaningful comparisons between offers.
Rule 3.18 of the CAP Code states "Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers". After discussions with ABTA in 1996 on how that principle should be applied to marketing communications quoting holiday prices that are subject to taking out compulsory insurance, CAP published guidelines for the industry to follow.
The Help Note on Compulsory Holiday Insurance explains that marketing communications must state if a holiday is subject to the purchase of compulsory insurance from the marketer. The typical cost of that insurance should also be stated; that can be done in a footnote as long as it is clearly linked to the basic price of the holiday by an asterisk (see points 1 and 2 of the Help Note).
Marketers may quote prices that include compulsory insurance; if they do they should state the inclusion and calculate the insurance element (see point 6 of the Help Note).
Marketers who offer flights or holidays with other non-optional charges, such as airport tax, fuel duties and air passenger duty, should include them in the price.
See entry on ‘Travel Marketing’ and the associated Help Note.
On a separate point, agents that offer optional travel insurance using comparisons with other insurance providers should ensure that their comparison neither misleads nor is likely to mislead. Savings claims should be accurate, generally representative and up-to-date (Sainsbury’s Bank plc, 21 April 2004; and Sainsbury’s Bank plc, 6 August 2003). Marketers should also ensure that the insurance cover they are offering is broadly similar to the competitor product on which the comparison is based. See entry on ‘Comparisons’.
See Help Note on Compulsory Travel Insurance.
Last modified : 26 July 2010