How are Thomas Cook refunds processed and when will customers get their money?

When Thomas Cook collapsed on 23 September 2019, thousands of staff lost their jobs. More than 140,000 holidaymakers were flown back to the UK in a massive airlift. And about five times as many had forward bookings with the giant holiday firm.

Most of them are covered by the Atol scheme, and are therefore entitled to full refunds. But months after the failure of Thomas Cook, there is growing frustration about the pace of paying back the cash. These are the essential questions and answers.

Just remind us about the Atol scheme – and how it applies in this case?

The Air Travel Organiser’s Licence scheme involves a form of compulsory insurance to protect against the risk of your travel firm going out of business between when you pay for your trip and your departure date. Everyone who books a package holiday, which means buying flights and accommodation in a single transaction, must pay a £2.50 levy into the Air Travel Trust fund.

The fund is run by the Civil Aviation Authority (CAA). If the holiday company fails, the CAA is responsible for giving a full refund to every customer with an advance booking.

Sounds simple enough. But what’s happened in the case of Thomas Cook?

Two and a half months after the company shut down, tens of thousands of people are frustrated because they have still not got their money back. They were not even allowed to apply for a refund until two weeks after Thomas Cook went bust. (Meanwhile, people who had paid by direct debit were seeing money arrive, as the transactions were reversed.)

On the first day the online payback scheme opened, applications were made for refunds on 67,000 bookings. The Independent calculates this represents 150,000 holidays.

At the time, the customers were told: “We aim to pay refunds within 60 days of receiving a valid completed claim form.” That 60 days is now up – and yet one in three of the people that applied on the first possible date, 7 October, have still not got their cash.

The Independent calculates this represents around 50,000 holidaymakers for whom applications were made, though the CAA has challenged this figure. 

Whatever the true number, it is still only a fraction of the total number of claims. Many more applied days or weeks later.

In addition, some customers who paid in part by direct debit and in part by other means have yet to secure full refunds. The CAA says: “A high proportion of those direct debit customers that applied for deposit payments have received these payments back.”

What has gone wrong with the process?

The scale is far larger than any previous such exercise, and so the CAA outsourced the refund programme to two claim-handling firms: Rightpath Solutions, which trades as Protect Claims, and CEGA.

This move has itself confused and concerned lots of people, who have received emails out of the blue from companies they don’t recognise demanding more information, including bank statements.

But even when the customers have provided the requested information, some of them have been asked again for the same evidence. And when their compliance is finally acknowledged, they are warned that settlement may not be for anything between 28 and 60 days. That means a possible further two-month wait.

What does the Civil Aviation Authority say?

The Thomas Cook refund operation has been more challenging than the CAA expected, for two reasons. First, the threat of fraudulent claims. Second, “the poor quality and complexity of the data we received from multiple booking systems used across the Thomas Cook Group”.

The authority stresses it wants to process refunds as soon as possible, but in some cases more evidence is needed.

“Therefore the 60-day claims period is paused while we await the required information,” says the CAA.

“This process is in place to make sure the right payments are being made to the right people. We do not expect the requests for further details to cause significant delays to payment once we have received the requested data.”

When will everyone finally get their money?

The CAA says it has refunded three out of five valid claims. When Monarch went bust two years ago, it was on a much smaller scale with far fewer package holidaymakers involved. But even then one in five customers had to wait at least three months to get their money back.

With Thomas Cook, there is also concern about up to 70,000 future holidays for which refund applications have not been made.

Meanwhile, many travellers who were not Atol protected – because they had paid for flight-only tickets – have reported that they recovered the money from their credit card firms within days of Thomas Cook’s collapse.

Can you provide a definitive account of who has been refunded, and who has not?

Only an approximation. The limited information provided by the CAA is concerned with bookings, which are typically for more than one person. From this data, The Independent has estimated the number of individual holidays.

Package holidays sold by Thomas Cook for which a refund is due: 650,000
Total holidays fully or partially refunded so far: 490,000.
Of which: 
Holidays paid for by direct debit, refunded in part or in full: 200,000
Holidays paid for by other means: 290,000

Holidays applied for refund but not yet paid: 90,000
Not yet claimed: 70,000

The Independent will update these figures as and when more information is provided.