Motion on raising maximum rate of TICF ex gratia payment
Following is the speech by the Secretary for Trade and Industry, Miss Denise Yue, in response to the Hon Fred Li's motion on increasing the maximum rate of ex gratia payment under the Travel Industry Compensation Fund in the Legislative Council today (Wednesday):
Mr President,
The Travel Industry Compensation Fund (Amount of Ex Gratia Payments and Financial Penalty) (Amendment) (No. 2) Rules 1996 seek to increase the maximum rate of ex gratia payment under the Travel Industry Compensation Fund (TICF) from 80% to 90% of the outbound fare paid upon default of travel agents. The Amendment Rules were gazetted on 20 December 1996 and came into effect on the same day. They were made by the TICF Management Board after consultation with the Financial Secretary and are subject to negative approval by this Council.
The Hon Fred Li has moved a motion to increase the maximum rate of ex gratia payment to 100%.
Mr President, I wish to state clearly to this Council that the TICF Management Board's decision to increase the maximum rate of ex gratia payment from 80% to 90% is supported by the Advisory Committee on Travel Agents and the Travel Industry Council of Hong Kong. The 90% rate is also accepted by the Consumer Council.
The Advisory Committee on Travel Agents, consisting of members from the outbound travel industry, other trade-related sectors and professions as well as consumer interest groups, supports the upward revision of the maximum rate of ex gratia payment from 80% to 90%, but not to 100%. The Committee considers that the increase to 90% will further enhance the protection of outbound travellers whilst at the same time address the concerns of the outbound travel industry.
The Travel Industry Council shares the view of the Advisory Committee on Travel Agents. In addition, the Council is concerned that if the ex gratia payment was set at 100%, the travelling public would be less prudent in choosing travel agents and would more likely than not go for those offering the lowest prices. Furthermore, travel agents would be less inclined to honour their moral obligations to clients knowing that the latter would be fully compensated upon the closure of their business. This would not be healthy for the outbound travel industry as a whole. This is the professional view of the travel industry and we should not ignore it lightly.