By Phil Marsh

Train companies profit from rail refunds not being claimed

Published 27th March 2014

Do you claim what you are due when your train is delayed or cancelled?

The use of UK railways is at record levels so presumably more and more people are being attracted to rail travel. Regular passengers will probably know that if their train is delayed then there is a procedure laid down for claiming a refund if you are on a specific train.

The less regular passenger may well not be aware that refunds are available after a specific period. Especially if your journey involves different train companies and you have booked in advance. Your first train may be late and you miss your connection, then what?

Your ticket for the connecting train may not be valid on the subsequent service so you have to pay again and its not your fault but he train you booked on was on time so they fulfilled their part of the bargain. Can you claim? So let’s look at what happens to cause a delay to a train and what happens to trigger a refund.

Who pays behind delays…

When a train is delayed by a signal or points failure, or overhead wire problems, the ‘blame’ or attribution as it is known, is allocated to Network Rail. They then become liable to pay compensation to the delayed trains. If a train breaks down, for example there is a door fault and this takes 20 minutes to rectify, then the train company concerned is allocated the delay and they have to compensate other train companies whose trains have been delayed as a result. This compensation is supposed to be passed through to delayed passengers.

Its official – three minutes is a delay

Officially a delay is when a train is more than three minutes late so if say a peak hour Southern service at Wembley Central station takes four minutes to get passengers off and on instead of the one minute allowed, the train becomes liable for any consequential delays.

For example, a southbound service may delay services at East Croydon importing delays to the Brighton main line. A northbound service could cause delays to London Midland and Virgin services on the West Coast Main Line.

This ripple effect can cause delays hundreds of miles away triggering passenger refund thresholds.

Busy schedules?

So why don’t all passengers claim their refund, after all, the delayed train company ALWAYS collects its compensation from the company that causes the delay. This is legally enshrined in the Track Access Agreement, Schedule 8, between the train company and Network Rail.

This Schedule 8 was designed to pay for refunds, alternative travel for passengers like taxis or buses and to also compensate train companies for a loss in revenue. But, if you are on a route with a train every 15 or 20 minutes and your train is late, chances are you will get another train and not necessarily be unduly delayed so even though your planned train is late, you may not be.

But Schedule 8 does not recognise this and always pays out and it is thought that around 300 staff are employed purely on delay attribution costing £30 million a year to run the scheme. It is acknowledged that Network Rail takes the blame for about 70% of all delays, but it would do as the one UK-wide rail authority while train operators cause the 30%.

Can’t be bothered for a few quid

Passengers are generally busy people and if you have a short journey or don’t pay much for a ticket because you travel off-peak, perhaps with a railcard many won’t bother to claim a few pounds compensation. But remember, the train companies will always be compensated under Schedule 8 whether passengers claim or not.

Who else may not claim? Well, business passengers may not worry about claiming as its not their money and here we could be talking about hundreds of pounds for peak time long distance fares.

Passengers from abroad are most unlikely to claim not knowing the system and may well have bought their ticket abroad.

Rail Regulator's study shows 75% of rail passengers are unaware of compensation and refunds rights

The Office of the Rail Regulator (ORR) has, following a study, recognised that many passengers do not claim refunds as they say, 75% are unaware of their compensation and refunds rights when trains are delayed or cancelled.

A year ago, ORR commissioned research to become better informed about passengers' knowledge of compensation and refund rights for delays and cancellations. Data on compensation across the rail industry including how much was paid out by who is not consistently captured, reported or published by all train companies.

ORR’s latest data suggests that from 2010/11, nearly £10.2m was paid out in compensation to passengers by 11 train companies.

The ORR has many duties and a lesser known one is that it is the consumer law enforcement authority for the railways. The ORR conducted an independent study to see if rail passengers across Britain are aware of their consumer rights and how to exercise them. Their survey also showed that:

  • Passengers believed that train operators could do more to promote compensation rights awareness
  • 74% of the study participants said that train companies do 'not very much' or 'nothing at all' to proactively provide information about compensation when there are delays.

Feedback also suggested that train companies should raise awareness of passengers’ refund Rights. This could be by prominently displayed compensation information at stations and on websites and probably more importantly information on the back on tickets. The claims process was highlighted as an issue as was the trend for refunds to be made with vouchers, rather than cash.

Remember, all claims have to be applied for taking time and effort. If time is a passengers’ worst enemy, then many won’t claim for just a few pounds. Train companies will deny it, but many use Schedule 8 payments to boost their bottom line profits.

What does ORR propose to do?

ORR says it will develop a code of practice on provision of ticket retail information to be live by the end of 2014. The aim is that the Code will provide clarity on what information passengers can expect from their train companies, including information on the different types of fares, any restrictions that apply, and key terms and conditions, such as compensation and refund rights.

They said:

Office of Rail Regulation chair Anna Walker said: Passengers must be at the heart of the rail industry and are crucial to its growth and success. We want to see that passengers are treated fairly, receive the quality of service they pay for, and when this is not the case, can hold their service providers to account. Our research suggests that simply putting information on a website, or only making it available on request, is not sufficient to help consumers be aware of or exercise their rights.

Code of practice this year

Britain's rail industry needs to be more transparent and proactive in providing information. This includes data on passenger compensation. ORR will work with industry to develop a code of practice for train companies which will be in place by next year, setting out what ticketing information should be provided to customers to help them make informed choices.

But there are no refunds if you are delayed driving somewhere, so should the railways give refunds? Food for thought!

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