REACH will be undergoing scheduled maintenance from Sat 27 Apr 10pm to 28 April 7am, and will not be available during this period. We apologise for any inconvenience.
1. Introduction
1.1.The Ministry of Trade and Industry (‘MTI’) and the Singapore Tourism Board (‘STB’) are seeking public feedback on the proposed amendments to the Travel Agents Act and Regulations. The public consultation period is from 21 June 2017 to 12 July 2017.
2. About the Travel Agents Act
2.1. TB’s Travel Agent (TA) regulatory framework comprises the Travel Agents Act (TAA) and the Travel Agent Regulations (TAR), which were enacted in 1976 and last amended in 1993 and 2007 respectively. The framework was intended to weed out fly-by-night TAs and provide consumer safeguards against TA malpractices.
2.2.Over the years, the travel industry has been evolving with rapid technological growth and changes in consumer travel habits. It is timely to update the TAA and TAR in order to continue facilitating a pro-business environment, enhancing consumer protection and strengthening the regulatory framework.
3. Current Travel Agent Industry Landscape
3.1.Today, there are 1,200 licensed TAs, which are important players in the tourism ecosystem. As designers of travel experiences, TAs contribute to the vibrancy of our economy, provide good jobs for Singaporeans and deliver memorable experiences to visitors and locals.
4. Proposed legislative changes
4.1.MTI/STB have reviewed the existing TA regulatory framework and are proposing the following key amendments.
Facilitate a pro-business environment
4.2.Encouraging innovation in travel products
a. Excluding/exempting low risk/incidental players. MTI proposes to exclude certain low risk entities that conduct TA activities for non-commercial purposes or incidentally, from the licensing regime. MTI also proposes to exempt entities selling or arranging tours within Singapore without passenger-carrying conveyance from requiring a TA licence. Such entities pose lower risk to consumers as prepayment is typically low or not required. This would encourage more entities to offer innovative tour products, contributing towards the vibrancy of the local tour environment and Singapore’s destination attractiveness.
b. Introducing tiered licensing regime. MTI proposes to introduce a restricted TA licence, with a lower minimum requirement of $50,000 in paid-up capital and net worth, for TAs who sell or arrange local tours with passenger-carrying conveyance but without accommodation (e.g. coach tours). These entities pose slightly higher risk to Singapore’s tourism sector as they could potentially offer zero-fare tours , and the new licensing tier will ensure some regulatory oversight over these entities.
4.3.Reducing compliance cost and administrative burden
a. Removing the requirement to purchase fidelity insurance . MTI proposes to remove this requirement, as fidelity insurance does not provide direct recourse to consumers.
b. Allowing the sharing of premises and exempting certain businesses from the requirement to display signs. TAs are evolving beyond the traditional brick-and-mortar model. This amendment caters to new business models such as home-based businesses, mixed businesses or where premises may be shared.
c. Requiring TAs to inform customers of changes to tours only if payment has been received and to introduce a provision for issuing pro-rated refunds. This is a more equitable arrangement for TAs, as they would not need to inform clients who have not committed themselves to any purchase. TAs will also only need to refund the unconsumed portion of the travel product if part of it has already been consumed.
d. Aligning the timing of submission of gross annual turnover to financial year end. MTI proposes to align the timing for submission of gross annual turnover with the submission of audited accounts, to reduce the administrative burden on TAs.
4.4.Deterring unlicensed TAs
a. Raising the maximum fine for contraventions by unlicensed TAs. The maximum fine for contraventions by unlicensed TAs will be raised to $25,000 per contravention. This will maintain the deterrent effect and uphold the reputation of the industry.
Enhance consumer protection
4.5.Safeguarding against errant TAs
a. Reducing “show cause” period for TAs issued with a Notice of Suspension or Revocation. To reduce the period that consumers are exposed to risk when dealing with a potentially errant TA, MTI proposes to reduce the “show cause” period for licence suspension and revocation from 21 to 14 days .
b. Disclosure requirement for TAs facing suspension/revocation of licence. In cases of more serious contraventions, STB will have the option to require TAs to disclose to customers during any “show cause” and appeal periods that they have been issued a notice or order of suspension/revocation. STB may also publish the notices on its website. These will allow customers to make informed decisions on whether to proceed with existing purchases, or to make further purchases, from the TA.
4.6.Safeguarding against general malpractices
a. Prohibiting TAs from publishing inaccurate or erroneous advertisements. The current prohibition on “false and misleading” advertisements will be amended to “inaccurate and erroneous” advertisement, and reclassified as a contravention punishable by administrative financial penalty. This change allows for more effective enforcement on ground.
b. Expanding existing safeguards for changes to tours, inaccurate and erroneous advertisement, settlement of disputes, and cancellation of bookings. This will expand the safeguards beyond just sightseeing and shopping tours, as is currently the case, to also protect consumers’ interest across all regulated TA activities.
c. Prohibiting TAs from touting. Touting tarnishes the image and reputation of the industry. This change is in line with the practice by regulators in other industries .
d. Legislation of the additional licensing condition (ALC) requirement on travel insurance. MTI proposes to legislate the existing ALC requirement for TAs to seek and record the decision of outbound leisure consumers to consider purchasing travel insurance that covers for TA insolvency. Legislating this requirement will provide more assurance that consumers are informed of the precautions they can take to safeguard their prepayments against sudden closures.
e. Prohibiting TAs from accepting payments via personal bank accounts. While the majority of TAs usually do not accept payments via personal bank accounts, this proposed amendment will disallow the use of personal accounts entirely, and further reduces the risk of a TA employee absconding with consumers’ monies.
4.7.Improving TA operational practices
a. Requirement to state name and contact particulars on all contractual documents, and to issue receipts for payment or deposits made. This will help consumers ascertain whether a TA is licensed, and facilitate queries, refunds and claims.
Strengthen the regulatory framework
4.8.Addressing gaps in enforcement powers and increasing range of administrative and enforcement action
a. Enhancing investigation and enforcement powers. MTI proposes to enhance STB’s investigation and enforcement powers over TAs suspected of errant behaviour, to be on par with similar licensing regimes . STB will be empowered to i) gather evidence from relevant third parties in an investigation; and ii) take photographs, audio and video recordings that may serve as evidence for offences and other contraventions.
b. Increasing penalty ceiling. The maximum fine for contravening the TAA and the maximum composition sum for compoundable offences were set in 1976 and 1993 respectively. MTI proposes to double the maximum fine, and to raise the maximum composition amount to $5,000 or half the maximum fine prescribed, whichever is lower, so as to maintain the deterrent effect.
c. Introducing administrative financial penalties. To enable a broader spectrum of policy options, and allow STB to take more timely and proportionate enforcement action, MTI proposes to introduce administrative financial penalties (AFPs) set at a maximum of $2,000 for contraventions of minor licensing conditions .
4.9.Update provisions for relevance
a. Removing Banker’s Guarantee (BG) as an option to supplement shortfall to the minimum net worth requirement. Travel agents currently have the option to provide a BG in lieu of meeting the minimum S$100,000 net worth requirement in order to be licensed as a travel agent. This option will be removed as it does not provide assurance that the travel agent is financially sustainable, and it does not provide any direct recourse in the event of insolvency.
b. Updating the provisions for cancellation of bookings and settlement of disputes. It will be clarified that TAs are required to state cancellation terms and conditions before any payment is received, and that TAs are required to settle disputes arising from cancellation, whether caused by the TA or otherwise.
c. Updating licensing fees. The licensing fees, unchanged since 1993, will be updated to align at cost recovery basis. A new application fee of $200 will be introduced, and the existing licence fee raised to $480. At the same time, the fee for branch licence and replacement of licence will be revised downwards to $48.
5. Invitation to Provide Feedback
5.1.MTI invites interested parties to provide their views and comments on the proposals by 12 Jul 2017. Electronic submission is encouraged. Please use the template in Annex C for your submission and send it to mti_feedback@mti.gov.sg.
5.2.Please note that all submissions received will be published and attributed to the respective respondents unless they expressly request MTI not to do so. As such, if respondents would like (i) their whole submission or part of it, or (ii) their identity, or both, to be kept confidential, please expressly state so in the submission to MTI. In addition, MTI reserves the right not to publish any submission received where MTI considers it not in the public interest to do so, such as where the submission appears to be libellous or offensive.
5.3.Please note that this draft amendment to the TAA and TAR is released only for the purpose of consultation and does not represent the final legislation. All comments received during the consultation exercise will be reviewed thoroughly and, if accepted, will be incorporated into the Bill for introduction in Parliament.
*****
