This article is from the Australian Property Journal archive
CONSUMER advocate CHOICE has filed a super-complaint to ASIC on the timeshare industry, calling on the regulator to enforce the law in the multiple cases of industry wide breaches.
According to a survey conducted by CHOICE, collecting data from 350 timeshare members, almost 30% of members want to leave their timeshare scheme but are unable to. While another 12.5% say they are considering leaving.
70% of those surveyed anticipate their debt and ongoing costs related to their timeshare will be passed on to their children, with another 15% unclear if this was a possibility.
“The timeshare industry is causing deep harm to people through high-pressure sales tactics, poor financial advice and terrible value products that trap people for multiple decades,” said Patrick Veyret, banking policy expert at CHOICE.
This notion seems to be endorsed by many timeshare operators, however CHOICE and legal experts, find this to be misleading and deceptive conduct.
“Many people are stuck in unfair and expensive contracts running for decades and being told by the timeshare provider that they need to pass this burden on to their children,” said Veyret.
Exit fees for enforced by timeshare providers were found by CHOICE to be exorbitant, with one surveyed case study reporting that they were asked to pay $29,000 just to be transferred to a shorter term contract.
Contracts can run from 60 to 99 years and can cost members as much as $450,000 in the long term.
CHOICE also highlighted the short timeframe of cooling-off periods, if the scheme is a member of the Australian Timeshare and Holiday Ownership Council (ATHOC) have only 14 days to change their minds. While schemes are members of the ATHOC, those that are not have 21 days to cool off.
Upfront fees also present an issue, with fees ranging from $14,990 to $29,250, with annual fees then starting at $800 and increasing every year. Over the past five years, as of December of 2019, annual fees had increased every year by 4.3%.
While in the financial services industry there is a ban on conflicted remuneration, timeshare salespeople are exempt for this ban, allowing them to recommend financial products that pay a commission but aren’t the best choice for the client.
While ASIC has in recent years tightened regulations, including stricter hawking rules, requiring better product disclosure, longer cooling-off periods, and financial-hardship relief, these changes are of little help to those already locked into these contracts.
“ASIC has the power to act against unfair and predatory practices in the industry, they need to use it,” concluded Veyret.
