James Walker: Don’t delay if you’re hit by the collapse of a company

Short-haul carrier Monarch Airlines ceased trading on Monday following a financial collapse. Picture: Oli Scarff/AFP/Getty Images
Short-haul carrier Monarch Airlines ceased trading on Monday following a financial collapse. Picture: Oli Scarff/AFP/Getty Images
Share this article
0
Have your say

If you’ve booked a holiday recently you’d be forgiven for glancing at the news nervously. Flight cancellations are still making headlines and with the collapse of Monarch airlines hundreds of thousands of people have been left wondering what happens with their travel plans.

So here’s some advice on what to do if you find you’re affected by a firm going bust.

Airline failures

When an airline collapses, the regulator of the industry, the Civil Aviation Authority, will swing in to action to help if you’re already abroad. They’ll usually publish information on their website explaining what will happen when it comes to getting you home, keeping you in accommodation and what you need to do next. If you’ve booked a package holiday, it’s likely you’ll have ATOL protection. You should contact the business that you booked your holiday with who’ll talk you through your rights.

The business has gone bust – how do I get my money back?

When a firm goes bust owing you money, goods or services, then you join a queue of people known as creditors. As a consumer, you’re generally last in the queue for cash and in practice, once investors, insolvency fees and employees have been paid, there’s little money left.

First things first, check to see if you have any statutory protection through schemes organised by regulators. These vary and can involve ATOL for packaged holidays, or the Financial Services Compensation Scheme for financial firms.

If you’ve paid by credit card:

The Consumer Credit Act says if you pay for things on a card that cost over £100 and less than £30,000 you could claim the money back from the card provider. You don’t even need to have spent the whole amount on the card as long as the deposit falls within the limits.

If you’ve paid by debit card

It’s not a legal right, but the card providers run a scheme called “chargeback” which means you might be able to ask them to recall your money if there’s a problem. But act quickly: if a firm has already gone bust it may be too late. Give the debit card provider a call and ask them to charge back the money as soon as possible. Using electronic money services like PayPal also gives you some rights, so lodge a claim using the firm’s dispute resolution rules.

Insurance

If you have a problem with a holiday firm going bust, check your travel insurance documents. But the majority don’t cover firms going bust. Where there is cover we’ve heard of some people being bounced back to card providers or ATOL first by their insurers. While you should try this regardless, there’s no reason you can’t claim on your insurance policy so don’t be dissuaded.

Other payment methods

If you’ve paid by cash, cheque or direct transfer, you’ve got no rights to recall your money if a firm goes bust.

Vouchers and gift cards

If a firm goes bust, these often become invalid. So if you hear rumours that a business is in trouble, don’t delay – use your vouchers and gift cards before it’s too late.

If you’ve got a problem, Resolver can help you sort it out for free. Check out www.resolver.co.uk.