Memorandum by Andy Harris
My name is Andy Harris.
I am submitting this evidence as an individual.
I have been an owner of timeshare since 1986 and I have worked
in the timeshare industry in England, Canary Islands and in the
Caribbean for about 15 years.
I am a shareholder in four timeshare companies
which are involved in development, sales and marketing, resort
management and resales.
I was invited to meet with the Consumer Affairs
Directorate in 2001 to discuss the protection of consumers for
timeshare sales.
I am a former committee member of the Timeshare
Consumers Association, I have membership of the Organisation for
Timeshare in Europe and I was the Expert Witness in a case involving
Lanzarote Beach Club.
I would like to give my evidence on the specific
issues as follows:
OVERVIEW
Rationale Legislation
1. I agree with Mr van der Mark says that
there is already enough legislation; we have the Companies Act,
we have the Sales of Goods Act and we are soon to have the Unfair
Commercial Practices directive. Therefore, in simple terms, if
the product does not do what it says on the tin, the consumer
may claim their money back.
2. It is very confusing for the consumer
who reads about UK law being overturned in a European Court of
Law, whereas in many instances, the national law overrides and
is stronger than the European law. For the sake of clarity for
the consumer, I would suggest that the European Union's timeshare
directive should be implemented by all member states and that
it should take precedence over any national law. Therefore, if
the cooling-off period is to be five days, then this should be
the same for everybody and it should override the fact that Germany
may want to go for a 50 day cooling-off period.
3. It has been agreed by both the OTE and
Mr Grey that the existing directive has had a marked affect on
timeshare sales. There have been less complaints about timeshare,
which may be looked at as a good thing. However:
(a) There have been more complaints about holiday
clubs.
(b) Holidays clubs did not exist before the legislation.
(c) There are less complaints about timeshare
because there are less timeshare companies marketing in the EC
countries.
(d) The directive has meant increased marketing
costs.
(e) This has led to higher sales prices.
(f) The consumer now has the same excellent product
at a higher price, but it has driven a number of companies into
financial difficulties which, in turn, have led to higher management
costs.
4. The definitions will cover everything
from a three year pack to a holiday home in Tuscany. I think the
definitions should just cover products bought outside your country
of residence. Alternatively, Article 1 should apply to all holiday
products and Article 2 could refer to a contract of more than
12 hours. This would give a level playing field with the rest
of the holiday industry.
5. National Provisions
I agree with Article 3 that companies should
provide written information where the consumer requests it.
6. Consumers have way too much information
available to them from far too many different sources. There should
be one source to obtain all information on legislation and this
should be the Department of Trade and Industry.
7. The Right of Withdrawal
From a consumer's perspective the provisions
on the right of withdrawal would appear to be very satisfactory.
However, as this encourages cancellations, this means that the
consumer who cancels an excellent timeshare product is likely
to end up doing as they always do, ie staying in sub-standard
accommodation at inflated prices through unscrupulous travel agents
and tour operators.
8. You have drawn comparisons between Europe
and the US. It has been brought to your attention that some States
in the US offer a three day cooling off period. Might I suggest
that you look at one of the world's biggest timeshare user countries,
which is South Africa? The Timeshare Institute of South Africa
(TISA) is a self-regularity body that governs business practices
in the timeshare industry in South Africa. They have a 15 page
code of conduct which all timeshare operators must adhere to.
This includes a five day cooling-off period. Rather than re-invent
the wheel, I would suggest that this is adopted for all EU member
states.
9. Advance Payments
The consumers can best be protected by saying
"No". Timeshares are generally offered to people between
the ages of 25 and 65 who are married or co-habiting and who own
their own house. The law can only protect them so far. Whilst
you feel the nanny state should hold the consumer's hand, I feel
that the consumer should be given more credit for their intelligence.
After all, at the age of 18 they are allowed to vote for MPs.
10. There is no problem for consumers making
advance payments in the resale market, so long as the consumer
has not been cold called.
11. Redress
Under Article 9, I believe that the best method
of out of court redress should be by a single professional organisation,
such as the Organisation for Timeshare in Europe. One of the problems
that the consumer has is the confusion created by having so many
different parties apparently involved with timeshare complaints,
eg the Office of Fair Trading, The department of Trade and Industry,
Trading Standards, Citizens Advice Bureau, the Organisation for
Timeshare in Europe, the Association of Timeshare Owners Committee,
then there are various one-man bands such as Mr Sandy Grey who
pretends to head up a consumer organisation.
12. Sanctions Monitoring and Enforcement
If all monitoring sanctions and enforcement
are done by one body, albeit the DTI or OTE, then they should
have the power to impose fines accordingly. It should be very
simple that any company not adhering to the rules should not be
allowed to trade.
13. I feel that because of the Unfair Commercial
Practices Directive that there is actually no need to make any
amendments to the Timeshare Directive. I would have thought that
making changes with something done as recently as 1997 is over
zealous and I would have expected the House of Lords to have better
things to do.
14. Outstanding Issues
If the Directive is to cover many holiday products,
then it should be known as the Holiday Directive.
I would now like to cover some other points
arising:
Languages
In Article 3 I would suggest that it is difficult
for small companies to have everything in different languages.
If the customer does not understand the language, then they should
either not sign the contract or have it translated.
Complaints
The proposal talks about a significant number
of complaints. However, this is not defined. If it is correct
that the majority of complaints are to do with holiday clubs,
then I agree with the OTE that they should be dealt with separately.
In the Consultation Paper by the DTI on the same issues in 2000,
it was pointed out that the majority of complaints are post-contractual
by members who are concerned about management fees. Therefore,
the changes proposed in the current Directive will not address
this issue.
Deposits and Cancellations
The proposal talks about member states, consumers
and other stakeholders versus the European timeshare industry.
I believe the significant contributions by timeshare to the economy
should not be overlooked. As an example, holiday bookings in certain
areas of the UK are way down due to the poor weather; however
timeshare units still retain their high occupancy levels, thus
keeping staff employed. By encouraging cancellations and stopping
the taking of deposits you will be further damaging the timeshare
industry.
Under self-regulations, we would use timeshare
trustees who are most certainly trustworthy to hold deposits.
As with many other products, the deposit should actually be non-refundable.
Customers should not be allowed to withdraw from contracts if
they agree to purchase a product and the product does what it
says, then timeshare should be treated as any other product. Customers
are simply guaranteeing their holiday accommodation for future
years at a fixed price.
Prior to the current Directive approximately
10 out of every 1,000 people invited to a presentation completed
a purchase. The legislation has now meant that only five people
out of the original 1,000 complete a purchase. This has led directly
to holiday clubs and timeshare resorts running into financial
difficulties. Any further legislation will simply damage the good
guys, whilst the bad guys will continue to find loopholes.
OTE
In your consultation with the OTE, it was pointed
out that the United States offer 10 days cooling off period. In
my opinion, there should be no cooling off period at all. This
would benefit the consumer as they would be able to buy the product
at a lower price. However, to extend the current period would
be a pointless exercise as the majority of people cancel within
the first two days anyway. I agree with the OTE that people do
not read contracts and so the more that is put in the paperwork,
the more it confuses the consumer who you are trying to protect.
If the OTE, who claim to represent the majority
of timeshare owners, are receiving just 250 complaints, I am surprised
that so much time is being spent on changing the legislation.
You say that the, "Directive has not gone wrong, but something
is wrong in the market place that was not before". Might
I point out that the legislation has created the holiday clubs
and you will create new ideas that circumvent the law if you make
any further changes, whereas if you make it easier to sell good
old fashioned timeshare, the travel clubs will disappear.
You say that timeshare is sold as an investment.
However, I find this an extraordinary claim. All timeshare is
sold as an investment in holidays and every sales presentation
I have seen explains that the product might not be worth anything
over a period of time. With the Sales of Goods Act, Companies
Act and the new Unfair Commercial Practices Directive, I agree
with Mr van der Mark that you have enough legislation already.
30 August 2007
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