The latest on TICO's funding model proposals

When the Travel Industry Council of Ontario (TICO) released its proposals for a future funding model, fee structure and for the Compensation Fund just before the Thanksgiving Weekend, there was a little something for everyone in them. 

And beginning this week, TICO will launch consultations with the industry to brief them on those proposals and to gauge registrants’ reaction to them. 

“The approach that we took was we tried to make sure that there was something in there for everybody,” Richard Smart, TICO CEO said during a briefing on the proposals.

Three of TICO’s five proposals focus specifically on the Compensation Fund and include: 

• Decreasing Compensation Fund payments to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales.
• Removing non-contributing end-supplier coverage (airlines and cruise lines) from the Compensation Fund, subject to government consideration and decision-making.
• Doubling the maximum Compensation Fund payment per person to $10,000 from $5,000 for consumers, subject to government consideration and decision-making.

The other two proposals focus on registrant fees, and involve: 

• Recalibrating registrant renewal fees, with modernized and more equitable fee bands.
• Instituting new late filing fees to encourage timely submission of required documentation and ensure efficient processing.

As Smart sees it: “There’s a little bit in there for consumers with the increased [Compensation Fund] caps. There is quite a bit for the industry… and there’s a little bit in there for TICO with the creation of some fees that will deter administrative burden in carrying out our mandates. We wanted to find a balance across all of those [areas].”

One of the concerns that TICO heard about fees as it was doing its review was that registrants would see exorbitant fee hikes, so TICO has recalibrated its renewal fee bands so that they work in a similar ways as personal income tax. As a result, all registrants will be paying the same variable rate on the same dollar of Ontario Gross Sales (OGS). 

And while Smart said that some registrants will pay more, under the new proposals, “90% of registrants are going to pay a flat renewal fee of $750.”

He observed: “A lot of our registrants are small business operators and they were telling us to keep it simple and the simplest thing to do is say your fee is X – you don’t have to do calculations and all.”

As for the Compensation Fund, Smart said that: “When we look at consumer protection, we look at the organization as a whole. We try to take a balanced approach and carry out our mandate and ensuring that we administer the Fund, protect the Fund as part of that, but we’ve had to dip into the Fund and that amount has been increasing over the years.”

This has been a problem since TICO’s inception and, Smart explained: “Those amounts that we’ve reimbursed from the Fund have always been shared with the Board, approved by the Board, our financial statements make reference to it, we haven’t hidden anything about it, but the reality is because of that misalignment in the funding model we’ve had to seek those reimbursements [from the Fund] and one of our goals is to fix that.”

And the proposed new funding and fee model – even when Compensation Fund payments are decreased to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales – will provide that fix, Smart explained.

The other change with the Fund is removing coverage for non-contributing end-suppliers such as airlines and cruise lines, entities that are not registrants and as a result do not contribute to the Compensation Fund. 

Smart observed: “We think in today’s travel environment there’s good justification [to remove the coverage of non-contributing end suppliers] and I think it really comes down to fairness and equity for the registrants.”

TICO is also proposing to double the maximum Compensation Fund payment to $10,000 per person from $5,000 per person consumers.

Smart points out that the current Fund caps have been in place for more than a decade and “we know that the cost of travel has increased significantly, just in the last year; so, we are seeing many claims against the Compensation Fund now for more than $5,000.”

TICO’s CEO said the proposals also address “one of the challenges that we have as a regulator around keeping our administrative costs down [and that] is having to constantly follow up with registrants who haven’t met their filing timelines.”

To that end, Smart said: “We’ve instituted some reasonable late filing fees, really to recognize those who pay on time – there’s no fee for them – and for those who do not pay on time, there will be a penalty.”

In this respect, he pointed out: “I can’t think of a vendor who doesn’t charge a late fee these days and TICO has never done that.”

And in case you were wondering, there’s no legislated consumer-pay model in TICO’s proposals, although the review did look at models in jurisdictions like Quebec, the UK, Australia, BC and California.

In fact, in a video on the TICO website, Smart provides some insights on the proposals and observations on the Quebec model.

Smart did, however, indicate that TICO would be interested to hear from registrants on whether there’s potential interest to voluntarily pass on and display registration renewal or Compensation Fund fees at point of sale. 

As for when the proposals would be implemented, Smart said: “We’re looking for an April 1, 2024, but that’s all subject to the consultations, the feedback and if there are course corrections needed.”

For a detailed guide of each proposal, click here. For those who want to estimate fees payable to TICO — combined registration renewal fees and Compensation Fund payments — under the proposed funding framework, go here. 

TICO is conducting a comprehensive consultation with registrants and stakeholders about the proposals. There are two ways to get involved: Complete an online survey and provide TICO with written feedback here. The survey will remain open until Nov. 10, 2023. Or attend a virtual or in-person focus group, go to TICO’s website to register.