Eighty per cent of holidaymakers are confused about financial protection claims travel agency group, Travel Counsellors.
The travel firm is calling on the Government and the Advertising Standards Authority to offer more clarity on how customer money is protected, following a recent customer survey.
And it claims organisations such as ABTA continue to mislead customers on the level of protection they provide.
A recent consumer survey by Travel Counsellors found confusion amongst consumers with just 12 per cent claiming to actually know what the Flight-Plus scheme is and how they are protected.
The survey shows that 85 per cent of Britons consider financial protection to be important when booking a holiday and for 20 per cent it was the very top priority.
David Speakman, Travel Counsellors' chairman said: "We commissioned the survey as we were aware of the on-going confusion amongst the general public about how they were protected when they booked their holidays, particularly when it came to ABTA financial protection.
"Financial protection in the travel industry is now such a jigsaw puzzle that many travel companies are as confused as customers and people are booking holidays thinking their money is protected when it's not."
Travel Counsellors is asking to hear from people who think they've been misled about protection, asking people to email with news of any issues they've faced to email@example.com
The company will also be adding a number of items to their customer website including a financial protection guide to help clarify to consumers how they are protected.
David said: "In the long-term I'm calling for an independent 'travel bank' to be established so an independent financial organisation holds customers' money before they travel- not the travel companies themselves. Then everybody will know where they stand.
"This will take time because tour operators' cash flows are now dependent on getting money very far in advance, but it's the right thing to do for holidaymakers and the reputation of the industry. It's simply got to change."
Wednesday, January 23, 2013