Meanwhile, customers who initially accepted a credit note from TUI will also be contacted to be given the option of a full refund instead.
The Competition and Markets Authority (CMA) has been investigating TUI UK after receiving thousands of complaints from people that they were not receiving refunds for their cancelled holidays within 14 days. Consumer protection law requires refunds within 14 days.
The CMA said that while the vast majority of people have already received their refunds or rebooked during its investigation period, any outstanding refund requests for people who had their package holiday cancelled as a result of coronavirus will be paid by the last day of this month.
The watchdog said it is “important” that customers know they are entitled to a cash refund as an alternative to credit notes, which many travel companies and airlines tried to encourage customers to take at the beginning of the lockdown period. TUI UK has now agreed to contact customers who have an unused credit, to let them know they can convert it to a refund, which will be paid within 14 days.
Andrea Coscelli, chief executive of the CMA, said that while the organisation understands that the pandemic has created extraordinary pressure for travel companies, including TUI UK, customers who had their holidays cancelled due to coronavirus must be treated fairly and receive their refunds promptly.
He said: “It’s absolutely essential that people have trust and confidence when booking package holidays and know that if a cancellation is necessary as a result of coronavirus, businesses will give them a full, prompt refund. The CMA’s action ensures that TUI UK customers will get their refunds by the end of the month.”
He added: “The CMA is continuing to investigate package holiday firms in the context of the COVID-19 crisis. If we find that businesses are not complying with consumer protection law, we will not hesitate to take further action.”
TUI’s commitments apply to all of TUI UK’s different businesses that offer package holidays, including First Choice, First Choice Holidays, Marella Cruises, Crystal Ski, Crystal, TUI Scene, TUI Lakes & Mountains and Skytours.
A spokeswoman for TUI said: “We remain sorry that holiday refunds took longer to process during the height of Covid-19. The volume of cancellations and customer contacts was unprecedented, and at a time when retail stores, contact centres and offices were closed because of the nationwide lockdown.
"We worked tirelessly to deliver system improvements in extremely challenging circumstances, making refund times shorter prior to the CMA engagement with the package travel sector. Where due, customer refunds will be made within 14 days, as they were prior to the pandemic. We would like to thank our customers for their understanding.”
The move comes a day after Thomas Cook relaunched as an online-only operation, a year after the 178-year-old firm went bust, stranding 150,000 holidaymakers abroad.