UK: The £10 cap on administrative fees charged for refunding unused train tickets could be lowered, after a study by the Office of Rail & Road estimated that processing a refund actually costs retailers less than £5.
ORR recently undertook the first review of refund fees since 2006, at the request of the Department for Transport.
It found that in the 12 months from April 1 2019 a total of 341 million tickets were issued, of which 5·8 million were refunded. The average administration fee, when charged, was £6·96 per ticket. The average cost incurred, such as staffing costs, internal systems and banking charges, was estimated at £3·77, although there was a range of costs among different respondents.
During the period under consideration 28% of potential admin fees were waived, and re-calculating the average admin fee per ticket across all refunded tickets gives a cost of £4·64.
The industry’s Ticketing & Settlement Agreement requires refund fees to be based on an assessment of costs, and so ORR has concluded that fees of £10 are too high. It is now working with DfT and the Rail Delivery Group to considering whether the cap should be lowered.
‘With 92% of refund claims now submitted electronically and almost all refunds paid out by bank transfer or card payment, we’re asking retailers to assess whether their administration fees for ticket refunds are cost-reflective and reasonable’, said Stephanie Tobyn, Deputy Director for Consumers at ORR.
Responses
‘We want to make it as easy as possible for customers to claim their refund and we support the work of our partners to ensure that the refund administration fee is cost reflective so that more of the refund goes to the customer’, said Rail Delivery Group CEO Jacqueline Starr in response to the study.
Anthony Smith, Chief Executive of the independent watchdog Transport Focus, said ‘if train companies are to enjoy the trust of the travelling public swift action is needed’.
Ticket retailer Trainline told Rail Business UK that ‘the refund process needs to be easy, seamless and fair for customers. At Trainline, we’ve been investing in making it simple for customers to get a refund in just one-click, underpinned by technology that reduces fraud and protects industry income. We’ve also introduced a system of tiered charges, which reduces the admin fee for our customers and makes it possible for more low value tickets to be refunded.’
