Posted 12th March 2018 | 1 Comment

Train operators threatened with surge in compensation claims

DEADLOCK is looming between train operators and the government over how much passengers should be compensated for late or cancelled trains, especially if the disruption means that passengers suffer severe ‘consequential’ losses, such as missing a flight.

Operators are increasingly under fire over punctuality. The consumer group Which? has accused them of misleading passengers about their rights when trains run late, and now a transport minister has signalled that he is in favour of tightening the rules still further.

Train companies have always been reluctant to take ‘consequential’ losses into account. These can be much higher than the price of a rail fare, such as when passengers trapped on a late train with economy ‘no-change’ air tickets miss a long-haul departure. In such a case, the price of the lost air fares can easily run into thousands of pounds, particularly if several people are involved.

The railway industry rules which have developed since the 1990s concentrate on the immediate effects of unpunctuality, offering partial or even full refunds of train fares if a delay is serious enough. ‘Delay Repay’ now starts to apply on some operators’ services after only 15 minutes, and this stricter margin is set to spread further as franchises are renewed or updated.

A change in the law in 2016 was intended to improve passengers’ rights. The Consumer Rights Act now allows claims for consequential loss when a rail service is ‘not provided with reasonable care and skill’, but this level of proof is ‘a very high legal hurdle to clear’ according to the Rail Delivery Group, which says compensation is already ‘increasingly generous and easy to claim’. It also denies allegations that passengers have been misled.

A spokesman added: “Train companies are sorry whenever journeys are disrupted and we have been happy to work with the government and the regulator to make clearer our customers’ rights. Nevertheless, it is important for our customers to understand that it is very unlikely they will be entitled to compensation for additional losses.”

However, the RDG may be speaking too soon. Rail minister Jo Johnson has told reporters: “There will be consequential impacts for passengers in certain circumstances and it’s right the conditions of travel are now making that clear to passengers, so that they can claim accordingly. In law they do have certain rights as consumers.”

This means that late-running trains could soon be triggering dramatically higher claims from delayed passengers, with similarly dramatic effects on the finances of operators and Network Rail.

The prospect of increased compensation has naturally been welcomed by consumer rights campaigners. Alex Hayman, managing director of public markets at Which?, said: “It’s good to see the rail minister backing passengers who should be able to claim for reasonable out-of-pocket expenses when their train service has been disrupted and it is the fault of the train companies.

“Train companies can no longer hide behind misleading terms to avoid compensating passengers and should proactively inform people about their rights. If the rail industry fails to do so, then the Government and the regulator must hold them to account.”

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Chris Jones-Bridger, Buckley

    The term 'not provided with reasonable care and skill' may have been an elegant phrase when constructed by the drafter of the 2016 Consumer Rights Act but as the saga of aviation compensation should have shown when challenged through legal process will provide months, nay years, of legal argument before the mud clears, if ever!

    Perhaps if the current incumbent of the junior ministerial brief Mr Johnson wishes to leave an impact on the industry for the benefit of the travelling public he should concentrate on two things. Firstly ensuring that the delay compensation package is a consistent offer by all franchise holders rather than the current fragmented offer only revised and updated through franchise renewal and secondly when journeys are disrupted that franchise holders have clear obligations, expressed through the conditions of carriage, that ensure a duty of care for their customers.

    Delay repayment systems are fine for addressing the rail element of a delay. To ensure consequential compensation is not to become a financial burden real time interaction with delayed customers is essential to mitigate the risk. BR Intercity had become adept at mobilising customer action teams (CATS) to intercept delayed trains to identify customers with urgent appointments & onward travel requirements such as flights to mitigate consequential inconvenience. This was pre widespread availability of mobile phones. Today's advances in communication should make it a necessity for all TOC's to be able to anticipate the consequences of delayed services & be seen to be proactive in ensuring affected customers can be assisted without recourse to overly costly compensation being incurred.