Holiday firms must refund customers fairly if they cancel due to illness or a death in the family, watchdog urges

TRAVEL firms will have to refund customers fairly if they have to cancel their holiday due to an illness or death in the family, a consumer watchdog has warned.

Holiday companies are allowed to charge customers a cancellation fee to cover their losses but they amount must be proportionate.

So, for example, if a holiday is cancelled last minute, they may be able to hold back the costs that it takes to resell the booking.

But some holiday firms withhold large upfront deposits for cancellations or refuse to hand back any cash to customers regardless even if the company is able to recuperate costs by selling the holiday on.

The Competitions and Markets Authority (CMA) says that cancellation costs often aren't clear enough for consumers who may not realise how much cash they must forfeit when they cancel due to illness.

Up to 89 per cent of the 2,000 people surveyed by the CMA wrongly believed they would be refunded all costs by the operator if the firm manages to resell the holiday.

Paul Latham, the CMA's director of strategy and communications, said the changes would make sure that customers are "treated fairly".

He said: "Unfair terms can't be enforced so they also won't protect businesses if challenged. The small print really can make a big difference."

Association of British Travel Agents (ABTA) chief executive Mark Tanzer said: "There are circumstances when a cancellation charge may apply, but it must genuinely reflect the costs of cancellations faced by the travel company.

"We always encourage people to take out travel insurance as soon as they book their holiday, which should protect them from the costs for most cancellations."

Rory Boland, travel editor at Which? said "it's time for travel agents to up their game."

He added: "If they continue to fail to treat their customers fairly, the CMA should not hesitate to take the enforcement action needed to stop people from getting ripped off."

It's always best to take out holiday insurance as soon as you've booked it to make sure that you're covered in case anything goes wrong.

We've put together a roundup of the best cheap travel insurance, where you can get cover for a year from £9.

Having a pre-exisiting medical condition can greatly increase the cost of your insurance - here's our guide to the best places to get insurance if you've been diagnosed with cancer.

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