FSA confirms probe at MyTravel

BATTERED tour operator MyTravel could face a heavy fine from the Financial Services Authority if an internal review reveals that it failed to keep shareholders fully informed about its finances.

Auditors Deloitte & Touche are working with MyTravel to discover the true extent of its accounting 'black hole'. They are due to update shareholders on 26 November, although some fear it could take longer.

The FSA has yet to launch a full inquiry, but is proceeding with a preliminary investigation into MyTravel's disclosures. The watchdog confirmed that it was 'having a look'.

Under the FSA's new powers, MyTravel and its directors could be fined if the group breached guidelines. Concerns centre on whether it could have provided investors with more information at the time of its profits warning in September. In October, Tim Byrne quit as chief executive. MyTravel then warned again on profits and admitted an accounting 'black hole' of up to £65m. Since then, it has refused to discuss its finances. The shares, 130p in September, have fallen to 15 1/4p, up 1/4p last night.

This week is crucial for the embattled company. Thousands of customers are due to pay deposits for summer holiday bookings. MyTravel has 'sold' 750,000 holidays to destinations such as Spain and Greece, but industry sources reckon 500,000 customers have yet to pay anything. A typical deposit is between £50 and £110, so MyTravel needs to clinch up to £55m in immediate cash.

Rivals say that so far there has been 'just a trickle' of customers wanting to change their bookings. The fear is that this could escalate. MyTravel said its customers have signed a contract, but in practice it will be difficult to recover money if they refuse to pay.