Package holiday firms have been told by the competition watchdog to offer refunds to customers whose trips could not go ahead due to coronavirus.

The Competition and Markets Authority (CMA) said it has received more than 17,500 complaints from consumers about the way businesses in the sector are responding to the pandemic.

It has written to more than 100 of the most commonly criticised companies, stating that full cash refunds should be provided “promptly and without undue delay”.

Under consumer law, customers whose package holidays were cancelled because of Covid-19 restrictions should have their money returned within 14 days.

The letter states: “The CMA recognises that the pandemic has created extraordinary pressures on package holiday businesses.

“Although we were sympathetic to the challenges faced in the early days of the pandemic, it is nonetheless important that businesses comply with consumer law.

“Where businesses have breached consumer law, the CMA expects them to take immediate action to bring themselves into compliance and address any consumer harm arising from the breaches.

“We recommend that you check your practices and policies are in line with the requirements of consumer law and make any changes where necessary.”

Tui, the UK’s largest tour operator, currently advises customers that refund requests can take up to four weeks to be processed.

The CMA established its Covid-19 Taskforce in March to identify commercial practices adversely affecting consumers.

Since it was formed, holiday lets firm Sykes Cottages reversed its policy on cancelled bookings and agreed to offer cash refunds instead of only re-bookings, vouchers or partial refunds.

The CMA said it could have launched court proceedings against the company if it had not changed its stance.