Ontario Regulation 26/05 Flashcards

Under Ontario Regulation 26/05, a registered travel agent receives a consumer's deposit by electronic transfer on a Monday. By what deadline must these funds be deposited into the designated trust account?

Answer: By the close of business on Wednesday (within 2 banking days)

O. Reg. 26/05 requires registrants to deposit all consumer funds into a trust account within 2 banking days of receipt. This strict timeline is designed to protect consumer money by ensuring it is segregated from operating funds promptly. Holding funds until departure or until the end of the week would violate this requirement.

A TICO-registered travel agent's trust account currently holds consumer funds for upcoming bookings. Which of the following represents a PERMISSIBLE withdrawal from that trust account under O. Reg. 26/05?

Answer: Remitting payment in full to a licensed wholesaler for travel services already booked on behalf of the consumer

Trust account funds may only be withdrawn for purposes expressly permitted by the regulation — primarily to pay a supplier (wholesaler, airline, hotel, etc.) for travel services booked on the consumer's behalf, or to refund the consumer. Withdrawing commissions before travel is completed, covering operating expenses, or making 'temporary' withdrawals for licensing fees are all prohibited and constitute misappropriation of trust funds.

A consumer prepaid a Caribbean cruise package through a TICO-registered travel agency. One week before departure, the cruise line (not a TICO registrant) declares bankruptcy and cancels all sailings. The travel agency itself remains solvent and open. Which statement best describes the consumer's recourse under O. Reg. 26/05?

Answer: The consumer has no claim against the TICO Compensation Fund because the loss arose from a travel supplier failure, not a TICO-registered registrant failure

The TICO Travel Industry Compensation Fund is specifically designed to compensate consumers who suffer losses caused by the failure of a TICO-registered travel agent or wholesaler. It does NOT cover losses arising from a travel supplier (airline, cruise line, hotel, etc.) going bankrupt. In this scenario the agency is solvent — the loss flows from the cruise line's insolvency, which falls outside the Fund's mandate. The consumer's remedy would be through travel insurance, credit card chargebacks, or the cruise line's own bankruptcy proceedings.

Under O. Reg. 26/05, which of the following individuals is legally required to hold their OWN registration as a travel agent with TICO?

Answer: An independent contractor who sells travel services to the public under their own business name, even if they remit bookings through a host agency

An independent contractor operating under their own business name and selling travel services to the public is carrying on the business of a travel agent and must hold individual registration regardless of whether they use a host agency to process bookings. By contrast, bona fide employees acting within the scope of their employer's registration, non-transactional referral agents, and internal corporate travel coordinators arranging travel exclusively for their own employer fall outside the registration requirement.

O. Reg. 26/05 imposes record-keeping obligations on registrants. Regarding transaction records, which statement is most accurate?

Answer: Records must be retained for 7 years from the date of the transaction and must be available for TICO inspection upon request

O. Reg. 26/05 requires registrants to retain transaction records for 7 years and to make those records available to the Registrar or an inspector upon request. There is no minimum transaction value threshold — all consumer transaction records must be retained. The 7-year period aligns with standard commercial and tax record-keeping requirements and gives TICO adequate historical reach for investigations.

A registered travel agent is winding down operations due to insolvency. At the time of closure, the trust account holds $180,000 in consumer funds for future travel. Several trade creditors are owed a combined $95,000. Under O. Reg. 26/05, what is the correct treatment of the trust account funds?

Answer: Trust funds are protected from the claims of general creditors and must be applied to consumers' travel services or refunded to consumers ahead of other creditors

One of the fundamental purposes of the trust account requirement under O. Reg. 26/05 is to shield consumer funds from the registrant's general creditors in the event of insolvency. Trust monies do not form part of the registrant's general estate — they must be applied toward the consumers' travel services or returned to consumers before any distribution to trade creditors. This is why proper trust account maintenance is a core compliance obligation, not merely an administrative one.