Courtesy of Jagged Globe

bonding and contribution scheme

Bonding

All members must provide a bond in order to comply with their obligations under the Regulations. A bond can be obtained from your bank or an approved insurance company and is calculated as a projection of your expected non-licensable turnover.

The bond referred to above is a formal undertaking to pay a sum of money to ABTOT in the event of the member's financial failure, primarily for the purpose of reimbursing customers who would otherwise lose money.

Applicants are not required to provide a bond until they have been notified that their application has been approved, at which time the formal bond document will be sent for completion by the applicant's bank or insurance company. For bonding purposes, tour operations are classified as "licensable" and "non-licensable" and ABTOT is only concerned with non-licensable.

Most established ABTOT members bond at 10% of the anticipated non-licensable turnover (the cost of the relevant packages x the number of packages you anticipate selling), although higher bonding levels may apply. New members generally bond between 15% and 25% of applicable turnover but may be subject to higher levels if need be, taking into account risk and type of operation.

For travel organisers whose turnover is concentrated over a short period, such as school and ski operators, they may be required to increase their bonding levels during the peak period.

Bond levels could be reduced once ABTOT is satisfied that a profitable trading record has been established, our financial criteria has been met, variations have been conducted in a tidy manner, all quarterly returns submitted by the required date and renewals completed prior to the expiry of the current membership.

Shortfall Insurance Contribution Scheme

In addition to the bond, members are required to contribute to the shortfall insurance scheme established by ABTOT to cover against shortfalls in members' bonds. This second line of defence will only be used in the event the underlying bond proves insufficient. Each member is required to contribute to the scheme, and this is why ABTOT applies its minimum financial criteria assessment on each applicant. The amounts payable to the scheme is dependent upon the size of bonded turnover. (Please refer to the Current Membership fees).

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