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Contents

Foreword 4

1. Introduction 5

Purpose of this report 5

Structure of this report 5

2. Summary of the problem 7

Passenger awareness 7

Process of claiming 7

3. Bringing about change 8

Improving passenger awareness 8

Improving the claims process 10

Clarifying passengers’ entitlement to compensation 11

Making compensation convenient and valuable to passengers 12

4. Regulating passenger compensation 13

The need for regulation 13

Responsibility for regulation 14

Securing passenger compensation schemes through the franchising system 15

5. Monitoring progress 19

Annex A: Progress against the ORR’s recommendations 20

Annex B: Franchise requirements relating to making passengers aware of their

right to claim compensation 22

Foreword

A successful railway benefits us all as a driver and enabler of growth, and a shift to

rail travel brings economic and environmental benefits. I want people to be confident

in the service and value they will get if they choose to travel by rail. Many travellers

have little option but to travel by rail, and I want to make sure that their interests are

protected too, and that they are treated fairly.

Passenger compensation forms a crucial part of the offer to passengers as

consumers. We must constantly strive to improve the punctuality of the railway, but

travellers need to know that they will be compensated fairly if the railway does not

meet its side of the bargain.

In recognition of this, the Department requires all new franchisees to offer the Delay

Repay compensation scheme. Delay Repay is currently operated by the majority of

operators and is a simple and straightforward compensation scheme for passengers

who have been delayed by 30 minutes or more, regardless of the cause.

Rail passengers will soon be able to claim Delay Repay if their train is more than 15

minutes late. An extended scheme, allowing passengers to claim compensation for

shorter delays, will be introduced within months on Govia Thameslink Railway

services, including Southern, and then rolled out across the country.

However the benefits of such schemes are seriously undermined if passengers

cannot access the compensation they are due. Passengers can only benefit if they

are made aware of their entitlement to compensation and can make a claim without

undue hassle or difficulty. New research published today

by Transport Focus, the

independent transport user watchdog, has found that in a survey of passengers only

35% those who were delayed went on to claim compensation.

Which?’s super-complaint to the Office of Rail and Road (ORR) was therefore a

timely and welcome intervention and I agree with the recommendations of the ORR’s

subsequent investigation.

I want and expect to see rapid progress made by the industry to improve the way

passengers are made aware of their entitlement to compensation and empowered to

make a claim. This response reports on some of the steps that the industry is taking

already, and sets out the progress that I want it to continue making, and how

government is playing its part to achieve this aim.

Paul Maynard, MP

Parliamentary Under-Secretary of State for Transport

http://www.transportfocus.org.uk/research-publications/publications/rail-delays-and-compensation-what-passengers-want

1. Introduction

Purpose of this report

1.1 This report is the Government’s response following the ORR’s investigation

of the

super-complaint

raised by the consumer body ‘Which?’. It explains how at this point

we intend to respond to the issues raised in the super-complaint, in the context of a

broader industry response led by the Rail Delivery Group (RDG), the ORR, and the

Department, and developing Government policy. In the report we set out the actions

we would like to see taken to:

• improve passenger awareness and understanding of compensation schemes

• improve the claims process

• ensure that compensation is as convenient and valuable to passengers as

possible

• monitor progress in addressing these issues

and consider how passenger compensation schemes are regulated.

1.2 We also set out how we propose to respond where the ORR has recommended

actions for the Department to take.

1.3 This report covers only the issues raised in the super-complaint. It does not cover the

Government’s policy on the amount of compensation that franchises offer to

passengers when trains are delayed or cancelled. While it sets out some initial

thoughts on broader issues around the regulation of consumer protection, the way

the Department and ORR will work together in all areas of rail sector regulation is the

subject of ongoing work.

Structure of this report

1.4 The rest of this report is structured into four sections:

• Chapter 2 provides a short summary of the issues that are hampering

passengers’ access to compensation, reflecting the findings set out in the Which?

report, the ORR’s investigation and research released today conducted by

Transport Focus.

• Chapter 3 describes what needs to change to resolve these issues, and what the

industry is doing about it.

• Chapter 4 sets out how we think passenger compensation should be regulated,

and the role we intend to play as a franchising authority in this.

http://orr.gov.uk/__data/assets/pdf_file/0009/21141/which-super-complaint-response-report.pdf

http://www.staticwhich.co.uk/documents/pdf/super-complaint-to-the-office-of-rail-and-road-pdf-5-34mb-428633.pdf

• Chapter 5 explains how the industry will keep track of progress in improving

access to passenger compensation.

• Annex A provides a summary of progress against the ORR’s recommendations.

• Annex B summarises the existing obligations on franchisees to make passengers

aware of their right to claim compensation.

2. Summary of the problem

2.1 The research published today by Transport Focus confirms many of the issues that

have been identified by Which?, the ORR and the Department. At the heart of the

problem are two fundamental issues. Firstly, many passengers are simply not aware

of their right to claim compensation for delays and cancellations. Secondly, even if

they are, the process of claiming discourages making a claim when set against the

value of the compensation that they might seek, and there are some barriers to

claiming altogether.

Passenger awareness

• There appears to be a lack of awareness in general concerning the possibility of

claiming and of the existence of the rail compensation schemes.

• On top of this there seems to be some confusion and uncertainty among

passengers about whether they are eligible for a claim, which could be

discouraging some from claiming.

• Differences in the schemes offered by operators and consumers’ statutory rights

when buying a service could cause confusion.

Process of claiming

• Passengers will always trade the value of the compensation against the time and

effort involved in claiming.

• The value of the compensation to offer will always be a difficult decision for

government and private companies alike, but the claims process itself is clearly

perceived by many passengers as too time consuming or complicated.

• The way compensation is paid – how convenient it is and the form of payment –

also affects the value passengers get from compensation. For example, it is well

known that vouchers for future rail travel are unlikely to be viewed positively by

passengers making infrequent journeys.

• A particular issue appears to be establishing how to make a claim with little over

half of passengers making a claim satisfied with the information provided.

• In some cases passengers might be prevented from claiming altogether, for

example if the ticket barriers ‘swallow’ their tickets.

3. Bringing about change

3.1 The solutions to the issues identified lie predominantly in the hands of the train

companies. Making sure passengers receive the compensation they are entitled to

should be part-and-parcel of how train companies respond in times of disruption and

there are long-term and industry-wide benefits to promoting passenger compensation

schemes in general. Passenger compensation should be a positive ‘journey

guarantee’, while industry concerns over fraudulent claims must not be seen as a

reason for inaction.

3.2 Since the ORR’s report on 18 March 2016, we have been working with the ORR and

RDG on a course of action to start to address the issues raised by the super-

complaint. RDG, in particular, can play a leading role, bringing about an industry-

wide ‘offer’ to passengers and driving up standards, while the Department and the

ORR need to ensure that contractual and regulatory requirements support this.

Improving passenger awareness

3.3 Passengers who have been delayed need to know that they are eligible for

compensation. Additionally, if we are to maximise travellers’ confidence in choosing

rail, then prospective rail travellers need to know what they are entitled to, and when

and how to claim.

3.4 As the ORR has pointed out, there have been a number of interventions by the ORR

and the Department in recent years. In 2013, the Association of Train Operating

Companies (ATOC)

produced a ‘Compensation Toolkit’ which established a range

of practical measures that train companies could take to increase passenger

awareness of compensation schemes.

3.5 There are some signs of progress: research by Transport Focus three years ago

found that only 12% of eligible passengers made a claim

, compared to 35% in the

similar research published today.

3.6 However, we are persuaded that practice across train companies is still both too

variable and in many cases insufficient. Today’s research by Transport Focus

identifies the performance of train companies in alerting passengers to their right to

claim compensation as the single biggest source of dissatisfaction concerning

passenger compensation. The results of the ORR’s ‘mystery shopping’ exercise

show considerable variation and room for improvement in how information is

provided to passengers by staff. As the ORR highlighted, announcements and

printed information on trains and at stations need to be more consistent and efforts to

improve awareness and understanding amongst passengers also need to be

supported by enhanced training for station and train staff.

ATOC has since adopted the RDG name, which covers the activities previously carried out under separate names by ATOC and RDG.

http://www.transportfocus.org.uk/research-publications/publications/understanding-rail-passengers-delays-and-compensation

http://orr.gov.uk/__data/assets/pdf_file/0009/21105/rail-delay-compensation-mystery-shopping-findings-report.pdf

National promotional campaign

3.7 The ORR recommended that the industry develop a coordinated national promotional

campaign to increase passenger awareness. In response, RDG has developed an

ongoing co-ordinated campaign for the industry to improve awareness of the

compensation available to passengers. This campaign has now gone live

, and

activity will be ramped up at key points such as the autumn leaf fall season.

3.8 The national promotional campaign includes activity conducted both by RDG and

individual train companies, and RDG has identified a number of specific actions that

train companies should take. We want all train companies to participate in the

campaign and will expect franchised operators to commit to this. If a franchisee does

not take part in the campaign, we will expect them to justify this to us (see ‘Monitoring

and enforcing franchise requirements’ in chapter 4). We expect RDG to monitor and

evaluate the success of the national promotional campaign.

Improving consistency

3.9 The ORR has recommended that, where the mystery shop has identified poor

performance, the train companies should agree with it how they will address this.

This process has started and we will support the ORR as it progresses this action

and follows it up with a further mystery shop this financial year to assess progress

3.10 RDG is currently working to bring about a consistent set of minimum standards

between operators in the actions that they take to raise passenger awareness. It is

also developing a best practice suite of documents that will highlight the further steps

that could be taken. We are keen that aspects of this are made publicly available, so

passengers can hold operators to account. We are taking a keen interest as these

develop, and expect to see evidence of improvement, not a set of standards that

simply encapsulates the lowest common denominator.

3.11 RDG has also recently updated its Code of Practice for Passenger Information

During Disruption (PIDD)

in response to the ORR’s recent clarification that the

‘Information for Passengers’ rail passenger licence condition includes an obligation to

give information about passenger compensation schemes to passengers and

prospective passengers

3.12 Where the Department is the franchising authority, we will look to use our powers

(including through the franchise agreement) to bring about improvements, and to

pursue consistency of requirements. This is described in chapter 4.

What the Government is doing

• We are supporting and helping RDG as it implements the national promotional

campaign and develops a consistent set of standards for promoting passenger

compensation schemes.

• Where we are the franchising authority, we expect franchisees to participate in

the national promotional campaign and we will look to exercise our powers

through the franchise agreement to bring about improvements.

• We will support the ORR as it works with train companies to address the

issues identified by its mystery shopping exercise.

http://www.raildeliverygroup.com/media-centre/press-releases/2016/469771021-2016-10-17.html

http://orr.gov.uk/news-and-media/orr-blog/how-orrs-making-it-easier-for-passengers-to-claim-delay-compensation

http://www.raildeliverygroup.com/about-us/publications.html?task=file.download&id=469771025

http://orr.gov.uk/__data/assets/pdf_file/0015/4353/information-for-passengers-guidance-on-meeting-the-licence-condition.pdf

Improving the claims process

3.13 As the ORR says in its report, the information provided to passengers wishing to

make a claim needs to be easy to find, easy to understand and empower passengers

to claim. The process of claiming must be as quick and straightforward as it can be.

Improving the information that is available

3.14 The ORR has recommended some simple changes to TOC websites and printed

material which would help make information about making a claim easier to locate

and the process of making a claim more understandable and has called for train

companies to make these changes. We support it taking this forward with individual

operators.

Improving the claims process

3.15 The ORR has also highlighted a number of areas where train companies can do

more to improve the process of claiming compensation including in terms of the

requirements passengers have to fulfil to make a valid claim and the physical

process of making a claim. It has been working with train companies to agree how

they will implement these changes.

3.16 The ORR is currently following up with train companies to monitor progress in

implementing these changes

. If progress has not been made with franchised

operators we will discuss with the ORR what further action may be necessary.

Improving consistency

3.17 RDG is leading the industry to achieve consistency across operators in key aspects

such as offering online claims processes and making information easy to find.

3.18 RDG also has a direct role in making sure passengers have all the information they

need. It has already made some welcome improvements, and plans further

developments. It has created a single webpage which provides direct links to the

relevant areas of TOC websites for making claims

, and it plans further

enhancements as part of efforts to clarify information about what passengers’ tickets

entitle them to

What the Government is doing

• We will support the ORR in the actions it is taking with individual train

companies.

• We are supporting RDG in its efforts to ensure consistency in the process of

making claims as experienced by passengers.

• We will continue to award points where appropriate to bidders for franchises

who present credible plans to make the process of claiming compensation

swift and simple.

http://orr.gov.uk/news-and-media/orr-blog/how-orrs-making-it-easier-for-passengers-to-claim-delay-compensation

http://www.nationalrail.co.uk/times_fares/ticket_types/121354.aspx

http://www.nationalrail.co.uk/times_fares/ticket_types.aspx

Clarifying passengers’ entitlement to compensation

3.19 We understand that the fact there are different compensation schemes in existence

at present and in the past may have contributed to confusion amongst passengers

about their rights.

3.20 Many aspects of operators’ compensation schemes are already standardised. Most

passenger rail operators are party to the industry’s Ticketing and Settlement

Agreement (TSA). The TSA sets out various arrangements relating to ticket retailing,

including standardised conditions of travel (the NRCoT) which include minimum

standards for compensation for delays and cancellations. If train operators wish to

enter into alternative arrangements to this to satisfy the terms of their licences (set by

the ORR), the Secretary of State must consent to this. The Department requires

franchisees to subscribe to the TSA as a condition of their franchise agreement.

3.21 As well as this, most DfT franchises now offer a more generous compensation

scheme in their Passenger’s Charter, standardised across franchises, as a result of

the ongoing roll out of Delay Repay. Delay Repay is intentionally simple: the length of

delay for which compensation is due is the same regardless of the reason for the

delay, passengers’ overall journey length, or the ticket type used

Passengers’ statutory rights as consumers

3.22 Passengers now have recourse to clarified and standardised statutory rights across

all service sectors. The Consumer Rights Act 2015 applied to mainline passenger rail

services from 1 October 2016. The Act clarifies, harmonises and consolidates a

number of consumer rights, across sectors, which apply when purchasing a service.

As a result, it makes it easier for people to know their rights as consumers. The Act

could play a role, for example if passengers are not satisfied with the compensation

they are offered under an operator’s compensation scheme. It also covers a wider

remit than delays and cancellations, including promises made by operators that

consumers rely on in making their decisions. As a designated enforcer of the Act, the

ORR can take enforcement action in certain circumstances, such as against

infringements that harm the collective interests of consumers.

3.23 However we expect operators’ Passenger’s Charter compensation schemes to

continue to be the main means of redress for delays and cancellations in most

circumstances, as they have some key attributes which are advantageous:

• They set out in advance the levels of compensation that a passenger can expect

for different levels of delays, giving greater clarity and certainty over passengers’

entitlement in specific circumstances than is defined in the Consumer Rights Act.

• They can and should offer a quick and easy process to claim compensation.

• The schemes can and often do go beyond the requirements of the Consumer

Rights Act, for example including delays and cancellations even where these are

not the responsibility of the train company or the result of a lack of ‘reasonable

skill and care’.

3.24 As explained in the next section, we intend to discuss the regulatory framework in

this area with our stakeholders, and identify any changes that may be beneficial.

Prior to Delay Repay, separate schemes existed for season ticket holders and non-season ticket holders. These schemes still apply to

operators who do not offer Delay Repay.

What the Government is doing

• We will continue the roll-out of Delay Repay – including the change to the

threshold for compensation announced recently – as a common standard for

franchises. We will engage with incumbent franchisees that do not offer Delay

Repay as they seek to improve their compensation schemes.

• ORR and DfT will work together to ensure improvements are made by train

operators to the information available to passengers concerning their rights to

compensation.

Making compensation convenient and valuable to passengers

3.25 Set against the barrier presented by the claims process is the convenience and

usefulness to passengers of the compensation itself and the form it is provided in. It

is clear from today’s research by Transport Focus that rail vouchers are not

perceived as valuable by passengers.

3.26 The industry has already taken steps to make compensation more convenient and

valuable. The new National Rail Conditions of Travel (NRCoT)

, which replaced the

previous National Rail Conditions of Carriage (NRCoC) on 1 October 2016, mean

that passengers will always be presented with at least one ‘money’ option in which to

receive their compensation.

3.27 We want to see even more progress made to present more passengers with a wide

range of convenient and valuable options in which to receive compensation.

Passengers can now exercise their statutory right, under the Consumer Rights Act

2015, to receive compensation in the same form that they paid for the service in

circumstances where the Act would apply. We expect this right to be extended where

possible to all circumstances where passengers are eligible for compensation under

operators’ Passenger’s Charter compensation schemes and we are pleased that

many operators plan to do exactly this.

What the Government is doing

• Changes to the NRCoT must be approved by the Secretary of State. We

welcome changes that will make compensation more valuable and convenient

to passengers than at present.

http://www.nationalrail.co.uk/times_fares/46427.aspx

4. Regulating passenger compensation

4.1 We expect the industry to drive forward the improvements that the ORR has

identified, but where it does not, there is a role for regulation and enforcement.

The need for regulation

4.2 The rail passenger services industry is dominated by franchises let by franchising

authorities, the largest of which is the government. While the Government is

supportive of the potential benefits of open access competition, limited network

capacity means that competition between more than one operator on the same route

may not always be practical

4.3 This situation, however, means that the ability of passengers to ‘vote with their feet’

as a means of driving change is often very limited, particularly in situations where

taking an alternative mode, or not travelling at all, is not an option. Instead,

prospective operators compete fiercely for the opportunity to run a franchise. Which?

argued that this industry structure results in consumer detriment which could have

contributed to the issues it has identified, and that increased competition would drive

up standards.

4.4 However the ORR concluded in its investigation that it is “less clear whether

competition – on its own – would sufficiently address the issues with passenger

compensation”. For example, it pointed out that government franchises in fact offer

better terms than current open access operators do, even though it is the latter that

are exposed to greater degrees of competition. Moreover, in the aviation sector,

where operators compete with one another to a much greater extent, the ORR

pointed out that operators adopt quite different standards on customer care, some of

which could be leading to consumer detriment.

4.5 We agree with the ORR’s assessment. In the aviation sector, travellers appear to

make their travel choices either with little regard to, or in spite of, particular airlines’

stated or reputed approach to customer care

. As a result, when things go wrong,

without regulation passengers may not be treated in ways that they consider fair. It is

likely therefore that regulatory intervention to protect consumers would continue to be

required even if levels of on-rail competition were increased, and could even become

more important.

Following the recent report of the Competition and Markets authority into passenger rail services, the Government is currently actively

exploring steps which may potentially facilitate greater open access competition, subject to important reforms being made to industry

charges.

It is not clear that greater levels of awareness of passenger compensation schemes amongst prospective passengers would lead

them to take operators’ approach to customer care into account more fully when making travel choices.

Responsibility for regulation

4.6 Which? argued that the current institutional and regulatory landscape itself could be

leading to consumer detriment. It pointed out that consumer protections and benefits

are secured through a mixture of contracts with franchising authorities, industry-

controlled standards such as the NRCoT, and operator licences, which are enforced

by the ORR. It argues that this creates a dilution of responsibility.

4.7 Part of the confusion arises because many important passenger benefits are secured

through the agreements between franchising authorities and franchisees. With the

vast majority of passenger journeys being made on franchised services, it is easy to

forget that – as Which? pointed out – open access operators are not covered by such

franchise agreements.

4.8 However it is perfectly legitimate – and of significant benefit – for franchising

authorities, within the regulatory framework, to secure passenger benefits through

the contracts they let. It is also perfectly legitimate for open access operators to

determine their own approach to passenger compensation so long as these comply

with all the relevant regulations and so long as consumers are treated fairly. The fact

that this happens does not diminish in any way the need for good consistent

regulation to ensure that consumers are protected across both franchised and open

access sectors.

4.9 The way the Department and the ORR will work together in all areas of rail sector

regulation is the subject of ongoing work to more clearly set out our respective

responsibilities, and consumer protection issues will form an important part of this

work. We must, at the same time, ensure that there is no duplication of effort

between regulator and franchising authorities that results in unhelpful administrative

burden on franchised operators or gives conflicting messages.

4.10 We will continue to discuss with our stakeholders how well the current and future

institutional, legal and regulatory framework is working for passengers and identify

any changes which may be beneficial

. We will take into account other Government

initiatives, such as the consultation on proposals to allow regulators to levy civil

monetary penalties for breaches of consumer law

and the consultation on the

consumer landscape in a number of sectors, including the provision of ‘alternative

dispute resolution’ functions

4.11 However we do not believe that the role that the franchising system has played in

securing consumer rights and benefits has, in practice, meant that consumer

interests have been overlooked. The government naturally takes into account a

broad range of considerations in decision making, including societal benefits. It has

led the way in responding to passenger perceptions and making improvements to the

terms of passenger compensation schemes. Delay Repay already exceeds the levels

of compensation set out in the NRCoT and similar regulation that exists in Europe

and this Government is committed to improving this further still.

4.12 All forms of regulation need to be proportionate and take costs into account. As the

ORR points out, it too would need to take into account the impact on the funds

available to the Secretary of State in regulatory decisions. This is not something that

We have already supported the ORR’s recent clarification that Licence Condition 4 (‘Information for passengers’) includes information

relating to passenger compensation for passengers and prospective passengers. This confirms that information regarding passenger

compensation falls within the scope of the existing ‘Passenger Information During Disruption’ (PIDD) regime.

https://www.gov.uk/government/consultations/improving-terms-and-conditions

https://www.gov.uk/government/consultations/improving-the-consumer-landscape-and-quicker-switching-call-for-evidence

EU Rail Passengers’ Rights and Obligations (“PRO”) Regulation (EC 1371/2007)

is unique to the ORR, or because of the involvement of government money. As

Which? has separately pointed out to us, regulators in other sectors also take into

account the impact on the costs that are passed on to consumers in their decision-

making. In the regulated rail industry this principle would need to be extended to

consider the impact on taxpayers through franchise subsidies.

4.13 We agree with the ORR’s assessment that securing passenger benefits through

licence conditions would not necessarily achieve change any faster than securing

them through franchise agreements

. The ORR must consider any representations

or objections to proposed modifications to licence conditions, and if it cannot reach

agreement with train operators then it must make a licence reference to the

Competition and Markets Authority on public interest grounds. The ORR also points

out that it would need to have regard to the funds available to the Secretary of State

in its decision-making, and would need to have regard to its duty to allow business

planning with “a reasonable degree of assurance”

What the Government is doing

• Consumer protection will form part of ongoing work to set out the way the

Department and the ORR will work together in rail sector regulation.

• We will discuss with our stakeholders how well the current and future legal and

regulatory framework functions and identify any changes which may be

beneficial.

Securing passenger compensation schemes through the

franchising system

4.14 As discussed above, we see the franchising system sitting within the regulatory

framework of the railways, not displacing it. This section explains how we intend to

use our power as a franchising authority for many of the train companies.

Franchise requirements

Requirement to have a passenger compensation scheme

4.15 We will continue to require bidders to set out in their bids the commitments they

propose to include in their Passenger’s Charters, and to commit to the minimum

standards we expect to see as part of this, including the amount of compensation

offered and the way claims are handled.

Obligation to promote compensation schemes

4.16 Most franchises let by the Department require franchisees to use “all reasonable

endeavours” to make passengers aware of their right to claim the compensation set

out in their passengers’ charter. This provides us with the authority to require actions

by franchisees to promote passenger compensation schemes, as a condition of their

contract with the Secretary of State

Which? cites, specifically, technological change in the way compensation schemes are publicised and administered.

The ORR summarises all of its railway duties at http://orr.gov.uk/about-orr/what-we-do/the-law/our-railway-duties

The ‘all reasonable endeavours’ form of words is used since whether passengers are in fact aware of their rights depends on a large

number of factors outside the control of the operator. So we expect operators to take steps that would or should achieve this outcome. It

also reflects the fact that what is reasonable will depend on a number of franchise-specific circumstances and will change over time.

4.17 Most franchise agreements also include a non-exhaustive list of activities which the

requirement is certain to cover. However the core ‘all reasonable endeavours’

requirement is the same and the list of steps merely makes clearer some steps that

are definitely included.

4.18 Because the franchising schedule

is necessarily staggered, and because the

franchise agreement requirements have been strengthened over time, the different

franchise agreements in existence have slightly different wording (see Annex B).

Some do not include the ‘all reasonable endeavours’ requirement at all.

4.19 We will continue the roll-out of the ‘all reasonable endeavours’ requirement,

introducing this in franchises at the earliest available opportunity. South Western is

one of the next new franchises scheduled

to be awarded. In the case of Chiltern we

would expect this requirement to be introduced at the earliest available opportunity,

for example aligned to other changes to passenger compensation schemes, while it

is currently intended that the Welsh Government will determine the specification for

the next Wales & Borders franchise.

4.20 Where opportunities are present, we shall seek to engage with incumbent

franchisees to reflect the latest non-exhaustive list of activities that the core

requirement is defined to include, in updated franchise agreements.

4.21 However we do not consider improvements in passengers’ access to compensation

to be dependent on making these changes. We want to be absolutely clear that we

expect all franchisees to ensure that passengers are not unduly impeded in

accessing the compensation schemes they have committed to provide for the benefit

of their customers.

Other requirements

4.22 As today’s research shows, when asked about being notified, making a claim, or

receiving compensation, many passengers would prefer greater automation.

Passengers want electronic notification, smarter online claim forms, and refunds

direct to their accounts. Many simply said they want the whole process to be fully

automated.

4.23 Many operators are automating their processes already. Most offer online claims

processes. Govia Thameslink Railway (GTR) is developing a system that can notify

passengers using their smartcard that they might be entitled to compensation for a

delay or cancellation

. Fully automatic compensation schemes (i.e. where money is

directly paid into passengers’ bank accounts without a claim being made) are even in

place for some passengers holding advance or season tickets on the Virgin West

Coast and c2c franchises and will be offered in the future on Arriva Northern and

First TransPennine Express.

4.24 Clearly automating some or all of the claims process would directly address the twin

issues of passenger awareness and improving the claims process. It may be one of

the ‘pull factors’ that encourages take up of smart ticketing, although we must be

careful not to disadvantage those without access to such technology.

4.25 Train operators should consider how to develop and offer automated processes

where appropriate and possible, so that more people can access their compensation

in ways that are convenient to them. As the ORR says in its report, full automation is

more feasible where passengers are travelling on tickets that are specific to particular

https://www.gov.uk/government/publications/rail-franchise-schedule

The franchise schedule is regularly updated and published at: https://www.gov.uk/government/publications/rail-franchise-schedule

http://www.thameslinkrailway.com/about-us/news/gtr-and-compensation-for-delay/

trains or where they ‘touch in and touch out’ on their journey, and where passengers’

payment details are available. As ticketing is modernised across the network, this

may well help to unlock more opportunities for full automation. In the meantime,

though, we would like to see digital technology and communications playing a role in

making passengers aware of their right to claim and making the claiming process

swift and simple for passengers and efficient for operators to administer.

What the Government is doing

• We will continue the roll-out of the requirement that franchisees use all

reasonable endeavours to ensure passengers are aware of their right to

compensation. Where there is no franchise competition in the near future we

will look to engage with incumbent franchisees to introduce this change as part

of broader changes to passenger compensation arrangements.

• We will seek to engage with incumbent franchisees to harmonise the non-

exhaustive list of activities that franchised operators should be undertaking.

Monitoring and enforcing franchise requirements

4.26 The ORR has recommended that the government provides guidance on and

monitoring of basic expectations where the ‘all reasonable endeavours’ conditions

are used, and proactively monitors franchisees’ performance against the

requirement.

4.27 It is for the Secretary of State to decide whether franchisees are fulfilling their

obligations under the franchise agreement

. However it is not possible to define in

advance the steps that would be appropriate and reasonable under different

franchise circumstances, or to predict changes in technology and passenger needs

and expectations. Train companies may well be better placed than the Department or

a regulator to analyse and identify the most effective measures for their passengers,

while by contrast there is a risk that more prescriptive guidance is overly rigid or too

slow or difficult to change.

4.28 Instead, over the next 6 months we will be talking to individual franchisees and will

require them to produce a report on passenger awareness of compensation

schemes. This should include an assessment of current levels of awareness among

their passengers, set out the steps they are currently taking to make passengers

aware of their right to claim compensation and what further steps they plan to take in

the future.

4.29 We will assess this against a wide range of information and considerations in order

judge whether the steps proposed are sufficient. For instance:

• The ORR found that few train companies made “any systematic attempt to

evaluate the success of their various methods for raising awareness”. This is

particularly relevant given the gap between the many (though inconsistent)

examples of good practice apparent throughout the industry, but the continued

finding of low levels of awareness.

• RDG will be developing a Best Practice document that provides an up-to-date

statement of the actions that train companies could take. Where an operator does

not propose to follow one of these actions, we will expect it to explain why.

The Department’s approach to enforcement of franchise agreements is explained in its published enforcement policy, which can be

found at https://www.gov.uk/government/publications/enforcement-policy-rail-franchise-agreements-and-closures

• Similarly, RDG has developed a national promotional campaign, which

incorporates actions for individual operators to take. If a franchisee is not taking

part in this fully, we will expect it to explain why.

• The results of the ORR’s mystery shopping exercise and the research conducted

by Transport Focus released today will be reviewed and train companies

benchmarked against their peers, as well as the ORR’s review of TOC websites

that took place this summer.

4.30 We will require a further report from each franchisee after 18 months

and we will

review progress and further information available including data collected by the

ORR into passenger complaints and the ‘compensation gap’. We are in discussions

with the ORR concerning a further iteration of today’s Transport Focus research.

Depending on progress the exercise may need to be repeated further.

What the Government is doing

• We will require franchisees to deliver a report which sets out measured levels

of awareness of compensation and outlines the steps they are, and will be,

taking to ensure passengers are aware of their right to compensation. We will

evaluate whether these steps are sufficient using all the available evidence.

• We will repeat the exercise after a further 18 months.

Selecting bidders

4.31 When evaluating bids we intend to continue to award points where appropriate for

credible initiatives that enhance the passenger compensation offer and make the

process of claiming swift and simple, where these can be shown to be good value for

money and affordable.

If there has been a change of franchisee in this timeframe, we may adopt different timescales. We will request an initial report from

the new operator after a reasonable period of time, with a further report after a reasonable time for improvements to be made.

5. Monitoring progress

5.1 The industry must monitor progress in continually improving passengers’ access to

compensation for delays and cancellations. Information about the performance of the

industry and individual train companies should be made available to the public to

increase transparency and confidence.

5.2 The ORR is, rightly, already leading the way here. It intends to report on progress

against its recommendations later this year. Its new annual ‘Measuring Up’

report is

a welcome development. To feed into this, it is also developing a new set of Key

Performance Indicators (KPIs) including data on complaints handling and measures

of the relationship between compensation paid out and compensation due to

passengers (i.e. the ‘compensation gap’). We will support the ORR in its ongoing

monitoring. We will work with it with a view to providing it with the data, where we

can, that it would like to form part of the core dataset where it does not have direct

access to this itself.

5.3 Today’s research by Transport Focus represents a significant contribution to the

debate. It represented a collaboration between Transport Focus, the Department and

the ORR, and it provides valuable information for franchising authorities and the

regulator alike. In its response to the super-complaint, the ORR said that it is working

with Transport Focus with a view to repeating research on passengers’ awareness

and experience of delay compensation schemes at more regular intervals. We are

talking to ORR about this and hope to replicate this successful example of

collaboration.

5.4 The department, as a franchising authority, will proactively monitor compliance with

franchise requirements, as set out in chapter 4.

What the Government is doing

• We will support the ORR in its ongoing monitoring, and will work with it with a

view to providing it with the data it needs for this purpose.

• We support the repeating of research into passengers’ awareness and

experience of delay compensation schemes. We are talking to ORR about this

and hope to replicate this successful example of collaboration.

http://orr.gov.uk/__data/assets/pdf_file/0012/22116/measuring-up-annual-rail-consumer-report-june-2016.pdf

Annex A: Progress against the ORR’s

recommendations

A.1 The following table provides a summary of the ORR’s recommendations and the

actions that are taking place to take them forward, coordinated by a joint working

group comprising RDG, the ORR and the Department. The right hand column

explains the role that government is playing.

Recommendation

Steps being taken

Our role

A co-ordinated national

promotional campaign to

increase passenger

awareness…

RDG has developed a

promotional campaign that will

be ramped up at key points

We have been clear about our

expectations for the national

awareness campaign.

We will expect operators

where we are the franchising

authority to participate in

RDG’s campaign

… supported by enhanced

training for station and train

staff

The ORR has worked with

individual train companies to

agree steps to improve the

information that staff give to

passengers. It will repeat the

mystery shopping exercise this

financial year.

We support the ORR’s action.

Greater proactive monitoring of

more prescriptive franchise

conditions

We will complete the roll-out of the requirement, to use all

reasonable endeavours, at the earliest available opportunity.

Where there are opportunities, we will seek to harmonise the

non-exhaustive list of activities that franchisees should be

undertaking.

Guidance on and monitoring of

basic expectations where “all

reasonable endeavours”

conditions used

We will require franchisees to deliver a report outlining the steps

they are, and will be, taking to fulfil the requirement and use the

available evidence and industry best practice to evaluate

compliance.

We will repeat the exercise after a further 18 months.

Clarification that ORR

interpretation of PIDD licence

condition should include

information provision on

compensation

Train companies and the ORR

have agreed on this

interpretation, and the ORR

has updated its regulatory

statement

. RDG has updated

the PIDD Code of Practice.

We have supported the ORR’s

position on this.

Data collected on monitoring

franchise requirements to be

published in our annual

consumer report to ensure

transparency and drive

improvements

We will discuss the data needed by the ORR and seek to share

this, where we are able to.

http://orr.gov.uk/__data/assets/pdf_file/0015/4353/information-for-passengers-guidance-on-meeting-the-licence-condition.pdf

Recommendation Steps being taken Our role

Implementation of Plain

English improvements to claim

forms, website information and

website navigation

The ORR has worked with

individual operators to identify

the actions that they will take.

It is repeating its review of

TOC websites and printed

material, and expects to

publish the results of this in

December.

We support the ORR in taking

this action, and use our

influence as a franchising

authority if necessary.

Where the mystery shop has

identified poor performance –

action with the companies

concerned to agree on the

changes required

The ORR has worked with

individual operators to identify

the actions that they will take.

We support the ORR in taking

this action, and use our

influence as a franchising

authority if necessary.

Further mystery shopping to

assess the extent to which

better information is available

from station and on-train staff

The ORR plans to repeat its

mystery shopping exercise this

financial year.

We support the ORR in taking

this action, and use our

influence as a franchising

authority if necessary.

RDG to publish best practice

for TOC claim processes and

encourage the adoption of

such practice

RDG has made initial steps to

develop best practice for both

making passengers aware of

their rights and the claims

process.

As a precursor, RDG has

developed basic frameworks

for both passenger awareness

and the claims process and is

using this to encourage a

consistent approach among

train companies.

We are taking a keen interest

in the development of this best

practice.

ORR will undertake a further

assessment of practices in this

area and report on the steps

that individual TOCs are taking

in the short-term to introduce

more passenger-friendly

processes for claiming

compensation

The ORR is repeating its

review of train company

websites and printed material,

and expects to publish the

results of this in December.

We support the ORR in taking

this action, and use our

influence as a franchising

authority if necessary.

Compensation gap – ORR will

carry out further analysis to

estimate and monitor the take-

up of compensation

The ORR is investigating the

feasibility of developing a

measure of relative trends in

compensation claimed and

paid, and compensation due.

We will support the ORR in

taking this action. We will help

by providing information as far

as possible. The measure will

be of value for us as a

franchising authority.

Awareness research – ORR

will work with Transport Focus

with a view to repeating

research on passenger

awareness and experience of

delay compensation schemes

at more regular intervals

The latest research conducted

by Transport Focus jointly

commissioned by DfT and

ORR is published today.

We support the repeating of

this research recommendation

and want to see this happen.

We are discussing with the

ORR how this can be taken

forward.

Table 1 Progress against the ORR's recommendations

Annex B: Franchise requirements relating to making passengers

aware of their right to claim compensation

B.1 The following table summarises the requirements in different current franchise agreements

relating to making passengers aware

of their right to claim compensation. The requirement includes a core ‘all reasonable endeavours’ requirement, plus a non-

exhaustive list of activities that this would include. Although the core requirement has stayed the same, the list of activities has been

expanded over time, and the different constituent parts are broken down in the table.

B.2 At refranchising, the latest franchise agreement wording is included in the new franchise agreement. Changes can also be achieved

through making in-life changes through negotiation with individual franchises.

Franchisee Franchise

Agreement

dated

Requirement to

“use all reasonable

endeavours to make

passengers aware

of their right to

claim compensation

pursuant to the

Passenger’s

Charter

“Including by

Date of next

franchise as

of Franchise

Schedule in

May 2016

“displaying the

relevant

information on

trains and at

Stations

“making appropriate

announcements to

passengers on trains

and at Stations when

the circumstances

giving rise to that right

occur

[a] “making

compensation claim

forms readily

available to

passengers…

[b] “… at Stations

and on the

Franchisee's

website”

Chiltern Mar. 2002 No No

Dec. 2021

Arriva Trains Wales Oct. 2003 No No No No Oct. 2018

South West Trains Sep. 2006 No No

Jun. 2017

https://www.gov.uk/government/collections/public-register-of-rail-passenger-franchise-agreements

Franchisee Franchise

Agreement

dated

Requirement to

“use all reasonable

endeavours to make

passengers aware

of their right to

claim compensation

pursuant to the

Passenger’s

Charter

“Including by

Date of next

franchise as

of Franchise

Schedule in

May 2016

“displaying the

relevant

information on

trains and at

Stations

“making appropriate

announcements to

passengers on trains

and at Stations when

the circumstances

giving rise to that right

occur

[a] “making

compensation claim

forms readily

available to

passengers…

[b] “… at Stations

and on the

Franchisee's

website”

Govia Thameslink

Railway

May 2014 Yes

No Yes Yes (a only) Sep. 2021

Virgin West Coast Jun. 2014 Yes No Yes Yes (a+b) Apr. 2018

c2c Jul. 2014 Yes No Yes Yes (a only) Nov. 2029

Southeastern Sep. 2014 Yes No Yes Yes (a only) Jun. 2018

Virgin East Coast Dec. 2014 Yes No Yes Yes (a only) Mar. 2023

Great Western

Railway

Mar. 2015 Yes Yes Yes Yes (a+b) Apr. 2019

East Midlands

Trains

Sep. 2015 Yes Yes Yes Yes (a+b) Jul. 2018

London Midland Dec. 2015 Yes Yes Yes Yes (a+b) Oct. 2017

Arriva Northern Dec. 2015 Yes Yes Yes Yes (a+b) Apr. 2025

First Transpennine

Express

Dec. 2015 Yes Yes Yes Yes (a+b) Apr. 2023

Arriva Cross

Country

Sep. 2016 Yes Yes Yes Yes (a+b) Oct. 2019

Abellio East Anglia Aug. 2016 Yes Yes Yes Yes (a+b) Oct. 2025

Table 2 Franchise requirements relating to making passengers aware of their right to claim compensation