Memorandum by Group RCI
1. With regard to measures intended to safeguard
timeshare consumers, what is the rationale for binding legislation
rather than a voluntary agreement?
Clearly the existing Timeshare Directive has
been a success for timeshare products and services. The standard
of consumer protection is high, and as a result, consumer confidence
has increased and complaints have significantly decreased since
the Directive's inception in 1994. The Commission has produced
no evidence to back up any claims that the current Directive is
not functioning effectively for the timeshare industry, and there
seems to be no real reason focus so heavily on increased regulation
of the timeshare industry. With regard to other travel products
or services such as discount travel membership clubs, RCI agrees
with the timeshare industry's assertion that the enforcement of
existing laws to target those rogue operators who are the real
cause of consumer detriment would be sufficient to alleviate current
concerns.
The vast majority of timeshare operators in
Europe have supported a self regulatory scheme since the formation
of the Organisation for Timeshare in Europe (OTE) in 199$. Through
the application of the OTE Code of Conduct, which covers not only
the sale and marketing of timeshare products, but also resale,
exchange and other holiday options not addressed by the 1994 European
Timeshare Directive, complaints about the timeshare industry have
reduced by 60% since 2002. Currently, the vast majority of complaints
are resolved within 14 days of receipt. Additionally, the OTE
Alternative Dispute Resolution Scheme, developed and independently
administered by the Chartered Institute of Arbitrators since 2005,
has been very successful in encouraging even swifter complaint
resolution for consumers.
Finally, if new legislation is necessary, and
it is, it should follow the same format of the Unfair Commercial
Practices Directive, focussing on general principles rather than
tying consumer protection to specific services or products, which
will be obsolete once new services have been developed with the
aim to circumvent the requirements of the new Directive. The advantage
of codes of conduct is that these can be swiftly amended to reflect
new market practices or the introduction of new products and services
thereby ensuring that the requirements found in the principle
based legislation are clarified to also apply to the new practices
or products and services.
2. In this policy area, what do you consider
to be the respective roles of EC law and national law?
While EC laws clearly have a role in ensuring
that consumers benefit from a high level of consumer protection
throughout the EU so that UK consumers benefit from the same protections
when buying abroad as when purchasing at home, the Commission
must leave to member states the discretion to enact such legislation
that defines how such consumer protection is achieved locally.
3. What has been your experience of the existing
Directive? What, in your view, are its strengths and weaknesses?
Generally, the existing Directive has worked
well as indicated by the significant decrease in consumer complaints
since its enactment.
4. What is your view of the scope and definitions
contained in the draft Proposal (Articles 1 and 2)? Might they
be expanded, clarified or reduced? If so, how might this be achieved?
The Commission's Impact Assessment on this issue
clearly demonstrates that the real consumer problems do not lie
with timeshare, but with other holiday products that do not afford
consumers the protection included in timeshare products—namely
Long Term Holiday Products and Discount Travel Membership Clubs.
The scope and definitions contained in the draft Proposal only
serve to confuse and muddle the issue, and add further burdens
to the timeshare product without adequately addressing the fundamentally
different Long Term Holiday Discount Travel Membership Club products.
5. On the basis of your own experience, what
is your assessment of the proposals relating to information provision
and advertising (Article 3 and Annexes)?
As a general rule, the proposed annexes relating
to timeshare and timeshare exchange require too much non-material
information to be included in the purchase contract while not
going far enough in relation to information required to be included
for Long Term Holiday Product contracts.
With regard to the new annex affecting our product,
timeshare exchange (Annex V) the requirements are unduly onerous
and at times confusing. For example, the Proposal states that
exchange is an ancillary contract and will be cancelled automatically
if the consumer cancels the timeshare agreement—and yet
the Annex requires that exchange companies indicate how a consumer
can cancel the exchange contract, an irrelevant disclosure since
the consumer need not take any action. Furthermore, the requirement
for exchange companies includes items only relevant to operators
of resorts themselves, such as disclosures of the cost of running
resorts, resort management and repairs, and other factors irrelevant
to an exchange guest, who is in effect only visiting the resort
he exchanges into. Finally, while we currently provide a disclosure
guide that succinctly describes the 3,300 resorts available for
exchange, the proposed depth of description in all EU languages
could lead to a volume of over 3000 pages.
6. How can consumers generally be best informed
by national governments or other bodies about their rights in
relation to this Directive (Article 10(1))?
RCI supports the OTE's suggestion of working
closely with partners such as the European Consumer Centres, the
DTI and the OFT to create a pan-European information campaign.
7. How satisfactory, from the consumer's perspective,
are the provisions on the right of withdrawal (Article 4(3) and
Article 5)?
We fully support the imposition of a cooling
off period, which we believes should be harmonised throughout
Europe. Since evidence shows that the majority of consumers who
cancel do so during the first few days of the cooling off period,
we do not believe that extending the period from 10 to 14 days
will lead to a significantly improved environment.
Additionally, as stated previously, while the
Proposal states that exchange is an ancillary contract and will
be cancelled automatically if the consumer cancels the timeshare
agreement, the proposed Annex requires that exchange companies
indicate how a consumer can cancel the exchange contract, an irrelevant
disclosure since the consumer need not take any action. We believe
this requirement is confusing and unnecessary, and suggest that
it be removed. We agree that written details of the cooling off
period should be included in the timeshare purchase contract,
together with the date of cancellation and details of where and
how the consumer should cancel, but that the exchange contract
should simply state that it is an ancillary agreement and will
be automatically cancelled in the event of cancellation of the
main purchase contract.
8. One of the aims of the provisions is to
establish a more consistent regime across Member States. To what
extent is this achieved, particularly given the flexibility enshrined
within Article 1(2) which allows Member States to apply more stringent
national provisions relating to aspects of the right of withdrawal?
Allowing Member States to apply more stringent
national provisions seems out of sync with the goal of establishing
a more consistent regime across the EU. The UK would seem to be
put at a great disadvantage since timeshare is a vital economic
contributor to the small tourist communities where resorts are
located and the lack of consistency would place such communities
at a disadvantage with their European counterparts, thus damaging
to the area in terms of year round employment and the benefits
to local businesses.
9. How can consumers best be protected from
any demand to make advance payments before the end of the period
during which the consumer may exercise the right of withdrawal
(Article 6(1))?
A full ban on advance payments would only exacerbate
an already tenuous situation, as timeshare developers would be
put at further disadvantage in working to sell and close legitimate,
trust-protected contracts. We have continually advocated the use
of independent third parties for deposit payments, a system used
effectively in many other jurisdictions, and strongly advocate
that such third party escrow system would encourage the growth
of the industry. As there is no evidence of a significant volume
of complaints relating to difficulties in obtaining refunds of
deposit payments, RCI joins the timeshare industry in calling
for the Commission to review this proposal.
10. How significant a problem for consumers
have advance payments been in the resale market (Article 6(2)?
The single most significant concern about advance
payments is the fraudulent practice of contacting a consumer by
phone and persuading an existing timeshare owner—generally
by making a false promise that a buyer has been found—to
part with a significant sum of money in anticipation of the sale
of his or her timeshare interest. Such practice, is outright fraud
and could be dealt with under existing laws. In many jurisdictions,
however, resale agents are permitted to take a fee for legitimate
advertising expenses. These reputable agents form an important
part of the industry and the Commission's proposal will impede
on their business practices and, ultimately, could make the selling
process more difficult for the timeshare owner.
11. What are your views on the provisions
relating to judicial, administration and out-of court redress
(Article 9 and Article 10(2))?
The proposal's requirements for judicial, administrative
and out-of-court redress are consistent with existing practice.
12. The proposed Directive expands the current
requirement for penalties against infringements of the legislation
(Article 11). What is your view on the level of sanctions imposed
by Member States for infringements of the current Directive, and
on the efficacy of monitoring and enforcement across the EU?
The sanctions as enumerated seem reasonable.
However, as mentioned above, we see the lack of consistent enforcement
to date as a significant issue.
13. With particular relation to enforcement,
do you consider that the relationship between the proposed new
Directive and the provisions of the Unfair Commercial Practices
Directive is sufficiently clear?
We believe that with proper enforcement, the
UCP Directive will address many of the concerns described by the
Commission and is a more appropriate vehicle for dealing with
the aggressive and misleading practices carried out by the rogue
operators who cause that consumer detriment.
14. Are there any significant issues in the
timeshare market that the proposed new Directive has failed to
address?
We firmly assert that, with regard to the timeshare
market, the current Directive has worked well and there is no
evidence to suggest that a new Directive is required. Clearly
the products described in the proposal as "long term holiday
products" pose concerns for regulators, however, we believe
that it is clear that these travel-related services are still
not as strictly regulated as timeshare by the proposal and could
be better addressed by enforcement of the UCP or other consumer
fraud regulations.
ABOUT GROUP
RCI
RCI is a vendor to the timeshare resort industry
that exists to make opportunities available for timeshare owners
to exchange their timeshare interests with other timeshare owners
in different locations and thus to maximise the flexibility and
enjoyment of their purchase. Timeshare Exchange facilitates the
delivery of high year-round occupancy rates in holiday regions
and encourages the even spread of tourism in local markets. RCI
Exchange is operated by Group RCI, a wholly-owned subsidiary of
Wyndham Worldwide. Wyndham has 5,000 employees in Europe, of which
1,500 are employed in the RCI-EU Timeshare Exchange business.
RCI Europe, Middle East and Africa Headquarters are in London,
with offices and employees in the UK, Eire, Spain, Belgium, Germany,
Italy, France, Greece, Portugal, Finland, Egypt, the UAE and South
Africa. RCI member households number more than 400,000 in Europe,
and while RCI does not own any resorts, over 3,500 resorts globally
are affiliated to RCI's network.
25 September 2007
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