Consumer advocates say new rules slapped on “one of the most predatory industries in financial services” are weak and Australians will continue to be ripped off.
The Australian Securities and Investments Commission on Friday issued new requirements for the timeshare sector, which involves buying a stake in holiday accommodation and getting a slice of time to use it.
• Allowing consumers to withdraw their application for stakes in a scheme, even after the cooling-off period, where their application is “subject to finance” and they do not proceed before the loan is provided
• Hardship withdrawal arrangements
• Compliance and audit requirements for points-based programs to reduce the potential for dilution of members’ interests
• Strengthened disclosure requirements to ensure consumers are presented with clear and prominent information about the key features and risks of time-sharing, both verbally and in writing, at sales presentations
• Amended fees and costs disclosure tailored to the different types of time-sharing schemes requiring clear information about the upfront and ongoing costs involved
Choice last year reported on a 69 year-old couple being trapped into a 99 year contract.Source:Supplied
However, Choice says it is a Band-Aid solution.
“ASIC has taken years to assess the regulations for timeshare schemes but failed to make meaningful changes to protect consumers,” director of campaigns Erin Turner says.
“The timeshare industry is one of the most predatory industries in financial services. Given the poor track record of financial services in recent years, that’s no mean feat.”
Ms Turner says Choice regularly hears from people caught in expensive, long timeshare contracts, sold through high-pressure sales tactics, with no means of exit.
“ASIC’s response is a Band-Aid solution that relies on simply disclosing conflicts in the industry,” she says.
“Australian consumers will continue to suffer as a result of these weak rules.”
She says consumers are better off booking holidays directly than buying into a timeshare scheme.
Choice research in 2018 found a two-bedroom timeshare apartment on the Gold Coast was 938 per cent more expensive than similar accommodation sourced on an online booking site.Source:Supplied
“They are complex financial products that are designed to trap people into contracts that can run for over 90 years and cost as much as $450,000,” Ms Turner says.
“Our research found that some timeshare providers are 938 per cent more expensive than booking similar accommodation online.
“As domestic travel increases during COVID-19, timeshare operators will be looking to capture new customers, so people need to be careful.”
ASIC says it remains concerned about time-sharing sales practices, but it is appropriate to give the industry time to implement the new requirements, which kick in late next year.
“ASIC will review the sales practice in early 2022, and if pressure selling conduct leading to poor consumer outcomes is identified, we intend to consider further measures to address this harm.”
The Australian Timeshare and Holiday Ownership Council told NCA NewsWire a statement would be issued shortly.
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