The Association of ATOL Companies (AAC) has issued a stark warning about the risks of booking with an unprotected company.
"You wouldn’t buy a car without an MOT Certificate, so don’t buy your travel without an ATOL licence," chair Lindsay Ingram told British consumers.
"It is vital that customers only book with a business holding a valid UK controlled ATOL licence, without it, your holiday may depend on a wing and a prayer."
The AAC believes proposed changes to the law on the sale of holidays, due to come into force in 2018, will only increase the risks to customers.
A new EU Directive on Package Travel is set to be introduced in 18 months which positively encourages businesses to look for the lowest cost scheme within Europe.
But the AAC said the collapse of Lowcost Holidays and Lowcost Beds earlier this month has put an end to the belief that ‘any form of protection will do’.
If every one of the 137,000 people affected by the peak season failure makes a claim, the AAC believes each holidaymaker will receive less than £10 in compensation under the Majorcan-operated scheme that Lowcost had joined.
"We believe the integrity of the ATOL scheme is vital and should not be allowed to be diluted by other unknown overseas systems of protection," said Alan Bowen, legal adviser to the AAC.
"This was clearly the thoughts of the CAA at the time that Lowcost moved to Palma Majorca who did all in their power to ensure adequate protection for UK purchasers but were restricted by EU law in putting the necessary safeguards in place.
"For the 137,000 affected by the collapse it is too late, but we need to ensure this can never happen again."
