Teletext Holidays will face legal action unless it repays more than £7 million to customers whose package holidays were cancelled due to the coronavirus pandemic, the competition watchdog has warned.

The Competition and Markets Authority (CMA) said the firm has failed to address its concerns after hundreds of customers complained they had not received refunds owed for cancelled trips within 14 days, as required by consumer law.

The firm must now comply with the law

CMA chief executive Andrea Coscelli said: “There must be no more delays to Teletext refunding customers for holidays they could not take because of the pandemic.

“It is unacceptable that many have already waited months for the refunds they are legally entitled to.

“We take very seriously the ongoing failure of Teletext Holidays to meet its obligations.

“The firm must now comply with the law and commit to refunding its customers.

“If it does not do so, we will not hesitate to pursue this case in court.”

The CMA said it wrote to Truly Holdings Ltd – which operates Teletext Holidays – in March, setting out its concerns and giving it “an opportunity to address them”.

It told the firm it could avoid potential court action by signing formal commitments to refund affected consumers and ensure compliance with Package Travel Regulations.

But the company has not agreed to provide undertakings “that are sufficient to address the CMA’s concerns”, according to the watchdog.

Teletext Holidays said in a statement that customers’ money for flights is passed on to airlines at the time of a booking, and it is “experiencing very long delays” in that being returned.

It went on: “Teletext Holidays have consistently stated our commitment to refund all customers as quickly and practically as possible.

“We have been in continuous dialogue with the CMA providing evidence of why the refund process has been delayed.

“We have also provided real-time plans on how and when we can refund all customers. Therefore, we are extremely disappointed with today’s CMA announcement that seemingly ignores the reality of the challenges we face through no fault of our own.”

Package holiday firms have faced severe criticism from the CMA due to the slow pace of processing refunds.

In February, lastminute.com paid out £1 million to thousands of customers whose holidays were cancelled because of Covid-19, but only after being threatened with court action.