Fred Olsen outlines its concerns over financial protection

Fred Olsen has issued a statement  explaining why it is taking action to reduce the risk of selling through travel agents. This is what it had to say:

"Given current economic conditions and the recent financial difficulties faced by a number of retailers, Fred. Olsen Cruise Lines is seeking to minimise its financial risk, whilst at the same time ensuring that it continues the strong relationship it enjoys with its valued travel trade partners.

It is important to note that ABTA only provide financial protection for an operator up to three times its annual subscription in any one financial year.

This provides limited cover, at just over £140,000, compared to the millions of pounds of Fred. Olsen deposits and balances that are held by agents at any one time (referred to as ‘pipeline monies’).

Fred. Olsen Cruise Lines is in discussions with agents about the best way to achieve financial protection, working with a collaborative, partnership approach.

The cruise line’s first priority is to pay for and secure credit insurance for its retail partners.

This is becoming increasingly difficult, with many credit insurance limits that cover pipeline monies being reduced or removed; however, Fred. Olsen is working very hard with its insurance company to achieve this.

If the cruise line is unable to obtain the credit insurance or an agent is exceeding the limit that its insurer has put in place, then it is talking to agents about other options, such as a cash bond, bank guarantee, more frequent payments or contractual agreement for ad hoc early payments to mitigate the financial risk.

To ensure that all agents can continue to sell and increase their bookings with Fred. Olsen, the cruise line will also be offering a direct payment system, which will eliminate trading limits, allowing an agent to make a payment directly via F.OCAL, Fred. Olsen’s online booking system, and Fred. Olsen will in turn refund the agent’s commission.

Fred. Olsen believes that this will have a secondary benefit, whereby the agent may be able to reduce their own ABTA bond, as they will not be holding pipeline monies, and Fred. Olsen will have no claim on their bond."

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