The failure of Freedom Direct Holidays, the first one of the new-age “split-contract retailers”, will be a watershed case for protection.

Only when the paperwork is sifted and the complex contractual positions fathomed will regulators, professional advisers and trade bodies get to grips with the nightmare reality that consumer protection has become.

The CAA is currently prosecuting this sector’s market leader, Travel Republic, on the basis that flights sold at the same time “in combination” with other components should fall under Atol.

However, Freedom appears to have sold identically and had an Atol, yet the CAA says it is “unable to consider claims in” these “circumstances as there is no evidence of a contract with Freedom for the provision of air travel”.

If arrangements should be licensed, and were sold by Freedom that had a licence, then should not the consumer be paid from the Atol bond or the ATTF?

Effective consumer protection is shrinking. How can that be a satisfactory structure to move ahead with?

What will emerge from this mess is a radical review of consumer protection.

• Could CAA stance aid Travel Republic case? (14 May 2009)