Following action by the regulator, LoveHolidays has agreed to pay out more than £18m to customers still waiting for their money back.

The CMA said that when customers contacted LoveHolidays to request a refund for a cancelled holiday during the pandemic, they were told they would only receive money back for their flights once the firm had received refunds from the respective airlines.

But under the Package Travel Regulations, online travel agents are legally bound to refund customers for cancelled package holidays, regardless of whether or not the agent has received money back from airlines and other suppliers.

Following CMA intervention, LoveHolidays has now signed a formal commitment – known as ‘undertaking’ – that will ensure these customers receive all their money back.

In total, more than £18m will be refunded to 44,000 LoveHolidays customers. So far £7m of this has been refunded to 20,000 customers.

Having looked at LoveHolidays’ financial situation, and how quickly it can realistically repay customers, the CMA has set LoveHolidays a deadline of March 2021 by which to pay back customers.

In order for customers to receive their money back as quickly as possible, refunds will be made in two parts, for example:

Refunds for the cost of hotel accommodation and transfers:

• customers will receive refunds for holidays cancelled before 1 November 2020 by 31 December 2020
• customers will receive refunds within 14 days of the holiday being cancelled from 1 January 2021

Refunds for the cost of flights:

• customers will receive refunds for holidays cancelled before 24 August 2020 by 28 February 2021
• customers will receive refunds for holidays cancelled between 24 August and 31 October 2020 by 31 March 2021

To ensure that LoveHolidays sticks to its commitments, the company must provide the CMA with regular reports on the progress of its repayments.

If the firm fails to repay customers by these dates, the CMA is prepared to take LoveHolidays to court.

Andrea Coscelli, CMA chief executive, said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.

“Our action today means that LoveHolidays’ customers now have certainty over when they will receive their money back and they will receive this without undue delay.

“We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers.”

The CMA announcement follows significant action by the CMA in relation to holiday cancellations.

It has written to more than 100 package holiday firms to remind them of their obligations to comply with consumer protection law, and has already secured refund commitments from Lastminute.com, Virgin Holidays, TUI UK, Sykes Cottages and Vacation Rentals.