The CAA has confirmed it will extend ATOL protection for new refund credit notes up to the end of March.
This means that consumers whose package holiday bookings are cancelled will be able to safely accept a refund credit note - where it is suitable for them.
Consumers remain entitled to a cash refund should they not wish to accept a refund credit note.
Paul Smith, consumer director at the UK Civil Aviation Authority, said: “We recognise that changes to government restrictions on travel have an unprecedented effect on ATOL holders and on consumers with ATOL protected bookings.
“In light of these circumstances, we have extended ATOL protection for refund credit notes.
“This will allow for travel companies to offer their customers refund credit notes in good faith and mean that consumers will not be at financial risk if they choose to accept a refund credit note rather than a cash refund.”
Credit notes must be issued for a cancelled ATOL protected booking, the booking must have been cancelled by the tour operator due to the coronavirus pandemic and the refund credit note must be able to be exchanged for cash at a later date.