Watchdog to patrol travel agents on sale of 'bundled' cover

Holidaymakers are set to benefit from better protection after the Treasury decided that the Financial Services Authority should regulate all travel insurance sales.

The City watchdog is to be given extended powers to oversee the sale of "bundled" insurance offered by travel agents beside flights and hotel accommodation.

At present, the FSA regulates only travel insurance sold on a standalone basis by brokers and other providers.

"The Government's move to crack down on this market follows a scathing report by MPs and consumer groups earlier this year. Huge numbers of holidaymakers, it found, were sold policies that did not meet their needs.

"Evidence shows companies regulated by the FSA are better at getting consumers to make an informed choice because they are better at explaining the features and exclusions of the product and guiding the customer through the sales process," a government spokesman said.

However, the change won't come into effect until January 2009. "We have always been adamant there is no reason for travel agents not to be regulated when selling travel insurance," said Peter Vicary-Smith of the consumer body Which? "This finally offers consumers the protection they deserve."

He urged consumers to "stay ahead of the game" until 2009 - ensuring that if they do buy cover from a travel agent, they ask all the right questions.

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