Ontario’s provincial travel regulator has posted on its web site a proposal “for a modernized Funding Framework and Fee Model.”
Dated 26AUG, the document (see it in full here) states its goal is to “create a stable, sustainable, transparent, and risk-based funding model that will provide adequate revenues for TICO to continue to fulfill its mandate.”
TICO is proposing three changes to its funding that will take effect APR 2022.
It’s conducting a consultation process in SEP and OCT this year, and all registrants are urged to provide feedback.
Pre-Pandemic Problems
Well before the pandemic devastated the travel industry, there were concerns that TICO was underfunded, an issue the proposal acknowledges: “The Fund has functioned in the same way since inception and currently has a balance of approximately $23.5 million. An actuary report published in 2018 identified a potential funding gap in support of future consumer claims.”
Pandemic Pause
During COVID, TICO “worked with the Ontario government to provide regulatory amendments aimed at reducing burden on registrants including reduced reporting requirements as well as renewal fee and payment waivers.”
Now, the organization looks to industry recovery, and points out that it will have to, “return to having the industry fund its operations and the Compensation Fund, as was the case prior to Covid-19.”
3 Changes to TICO Funding
Although TICO acknowledges the effect of the pandemic on Ontario’s travel industry, Ontario law continues to bind TICO’s model and operations. According to TICO, “The current fee review assumes that the existing legislative framework remains.”
Nonetheless, TICO says the current proposal aims to address some inequity in funding.
“The size and complexity of TICO registrants varies widely, while renewal fees paid by these registrants does not,” the proposal says, noting that the current ‘matrix’ of annual renewal fees based on Ontario Gross Sales results in, “smaller registrants paying significantly more proportionally than do larger registrants.”
Furthermore, “Revenues collected through registration and renewal fees have historically been insufficient to sustain TICO’s overall operational costs.”
Consequently, the proposal calls for three changes to be implemented for the organization’s fiscal year 2022/23:
- Introduction of a “TICO Fee” to fund TICO operations.
- Adjustments to the renewal bands and associated fees.
- Temporary Moratorium on current contributions to the Compensation Fund.
“TICO Fee”
The proposed new TICO Fee will operate similar to the current compensation fund fee.
It will be based on a percentage of Ontario Gross Sales (OGS) so as the travel industry rebuilds, funding will increase accordingly. TICO registrants would contribute in a proportional manner.
“Subject to feedback received, the TICO Fee is anticipated to be set initially at the same level as current Form1 fees - $0.25 per $1,000 in OGS.”
However, the TICO fee may be adjusted following a future review.
Renewal Fee Band Adjustments
Proposed changes to renewal bands are intended to “provide greater equity.”
Two new bands are proposed, which would “result in a fee reduction to approximately 77% of registrants.”
Moratorium on Compensation Fund Contributions
TICO proposes temporarily suspending contributions to the Fund until its funding mechanisms and levels can be further reviewed and established.
The proposal does not indicate how long contributions will be suspended.
Future Modernization of TICO Funding
TICO acknowledges the proposed changes fail to address “fundamental issues” faced by TICO and the Compensation Fund.
Specifically, bound by current legislation, they do not “fully modernize TICO funding and do not provide a review of the future state of the Compensation Fund.”
TICO says it expects to provide specific recommendations and to hold further consultations in its upcoming fiscal year 2022/23 with the goal of implementing any recommended changes starting with fiscal year 2023/24.
Submitting Feedback to TICO
Ontario advisors and agency owners can submit written feedback about the proposal to TICO through a dedicated e-mail address feereview@tico.ca by 15OCT 2021. TICO notes that submissions should include name and contact information.
In addition, TICO will be holding virtual and in-person consulting sessions. Dates, times, formats and locations (if applicable) of these sessions have not yet been established, but will be posted on TICO’s website TICO.ca.
