Select Committee on European Union Third Report

Chapter 12: Redress

Judicial and administrative redress

162.  The proposed directive requires Member States to ensure that adequate and effective judicial and administrative means exist to ensure compliance in the interests of consumers, which may include allowing public bodies, consumer organisations or professional organisations to take action in the courts to enforce the provisions of the new directive (Article 9).

163.  Several respondents referred to the difficulty, or in many cases impossibility, of individuals obtaining legal redress. Tony Sedgwick (who for four years until 2006 was the CEO of the International timeshare resale association) said that prohibitive costs discouraged legal action, giving a false picture of levels of satisfaction (pp 96-99). Sandy Grey (TCA) told the Committee that lawyers were reluctant to handle timeshare cases because of the aggravation involved and the nature of the industry (Q 20).

Out-of-court redress

164.  Member States are also urged to encourage traders to inform consumers of their codes of conduct where they exist (Article 10(1)), and to encourage the setting up or development of adequate and effective out-of-court complaints and redress procedures for the settlement of consumer disputes under the new directive (Article 10(2)).

165.  We were told that consumers may take timeshare complaints to OTE about its members, and there is an alternative dispute resolution scheme which has so far only been used once (pp 13-16), but we also heard that many companies are not members of the OTE. The OFT stressed that much of the problem with holiday club activity was outright fraud and that rogues "will not sign up to any informal redress scheme" (Q 93).

166.  The TCA supported the idea of an EU-wide timeshare ombudsman scheme, on similar lines to the UK's Financial Ombudsman Service: this would require a licensing system for companies but could "solve a lot of not only redress problems but also act as a deterrent" (Q 31).

Conclusions and Recommendations

167.  We conclude that the provisions on individual redress in the directive, although an advance on the 1994 Directive, are insufficiently robust. (para 165)

168.  We recommend that the proposed directive be amended to entitle consumers to require that, in the first instance, an out-of-court settlement be sought through an independent arbitration or mediation scheme, without prejudice to the consumer's right of judicial action. (paras 166-167)

169.  We recommend that the Commission report to the Council and Parliament in 2010 on progress in the development of out-of-court redress schemes in these sectors. (para 166)

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