Memorandum by Local Authorities Coordinators
of Regulatory Services and Trading Standards Institute
1. QUESTION 1
1.1 With regard to measures intended to safeguard
timeshare consumers, what is the rationale for binding legislation
rather than a voluntary agreement?
1.2 ANSWER
1.3 The Commission's own study confirmed
the need to tackle the problem, which has evolved from a mere
sale of timeshare to other forms of holiday clubs.
1.4 Trading Standards have experience of
the problems encountered by consumers. We confirm that binding
legislation is the only way to prevent rogues ignoring any voluntary
agreement. UK consumers are targeted by rogues abroad who encourage
participation by transporting them to an isolated venue where
they feel unable to "escape". Promised incentives to
attend, very long presentations and misleading verbal indications
of resale procedures will not be resolved by any voluntary agreement.
1.5 We strongly believe that a failure to
introduce binding legislation could lead to a two-tier system
with the majority of operators complying with the voluntary agreement
but a hard-core minority failing to comply. This will lead to
uncertainty in the market place. The introduction of the Timeshare
Act 1992 considerably reduced the complaints received by Trading
Standards about this trade sector. Unfortunately certain operators,
in particular, the Resale market, those involved in the Points
business and those operators making boats available have operated
outside the controls of the Act.
2. QUESTION 2
2.1 In this policy area, what do you consider
to be the respective roles of EC law and national law?
2.2 ANSWER
2.3 TSI and LACORS consider that in this
policy area it is vitally important that EC law provides uniform
and consistent sanctions across the European Union particularly
due to the number of transactions in this sector being cross border
with the issues of different laws and languages. National legislation
must reinforce these sanctions via an enforcement mechanism that
deals with non-compliance, linked to robust trade association
measures, and provides adequate numbers of regulators to deal
with advice and enforcement. Cross border disputes are unfortunately
common place in this particular trade sector
2.4 EC law should also dictate whether it is
maximum or minimum harmonisation.
3. QUESTION 3
3.1 What has been your experience of the existing
Directive? What, in your view, are its strengths and weaknesses?
3.2 ANSWER
3.3 Weaknesses—The legislation is
out of date and therefore does not meet the needs for consumer
protection from similar trading practices. Comparisons with the
Package Travel Regulations are relevant as they were also implemented
in 1992. Since then the internet and the cheap flights have considerably
changed the industry. The existing Timeshare Directive failed
to consider the Holiday Ownership Clubs that have been a continuing
cause of complaint to Trading Standards.
3.4 TSI and LACORS consider that powers
given to enforcement authorities are not extensive enough. Other
powers are necessary if the enforcement of new legislation is
to succeed, ie the power of entry and the power to make test purchases
to ascertain whether an offence has taken place.
3.5 TSI and LACORS also consider that the
existing penalties are not a strong enough deterrent for breaching
the timeshare legislation.
3.6 The main weaknesses have been:
— Companies claiming they are not selling
Timeshare (uncertainty over Holiday Ownership/Points.
— Tele Sales companies giving misleading
information often linking Free holidays to presentations.
— Overseas enforcement Issues particularly
those countries where enforcement is a low priority.
— Data Protection issues where consumers
are cold called.
— Uncertainty over which company a
consumer has contracted with (often the case where marketing companies
are involved in addition to the presentation company and the actual
Timeshare Company.
— A clear breakdown of the costs involved.
— Security of consumer deposits/upfront
fees.
3.7 Another concern is the exploitation
of any loopholes as the market develops. The legislation needs
to be far reaching to pre-empt the developing market.
3.8 Strengths—The strength of the
existing Directive is that it met the demands at the time of its
publication. One of its main strengths is the 14-day cooling off
period. Its introduction has seen a reduction in the number of
complaints received by Trading Standards.
4. QUESTION 4
4.1 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?
4.2 ANSWER
4.3 TSI and LACORS want transparency. This
is essential in any timeshare contract.
INFORMATION PROVISION
5. QUESTION 5
5.1 On the basis of your own experience, what
is your assessment of the proposals relating to information provision
and advertising (Article 3 and Annexes)?
5.2 ANSWER
5.3 TSI and LACORS consider that all the
prescribed information, especially the right of withdrawal mentioned
in the annexes should be bold, precise and compelling and not
buried amongst a substantial amount of meaningless information.
5.4 As Trade Association only covers members,
TSI and LACORS believe that consideration should be given to making
membership compulsory. We also consider that the OFT should be
working with this sector to bring any Trade Association into the
OFT Code Approval Scheme in order to ensure greater protection
for consumers.
5.5 In addition, TSI and LACORS consider
that it would be useful to have the adoption of the format used
in Consumer Credit Act regulations whereby key information headings
and warnings are contained in boxes, which make it easier for
consumers to understand.
6. QUESTION 6
6.1 How can consumers generally be best informed
by national governments or other bodies about their rights in
relation to this Directive (Article 10(1))?
6.2 ANSWER
6.3 TSI and LACORS consider that there should
be a requirement for all timeshare businesses and holiday ownership
clubs to highlight the requirements of the new legislation on
their websites and advertising.
6.4 We also suggest that information should
be provided to consumers by consumer champions such as the new
National Consumer Council or the OFT. We also think that the timeshare
industry should follow the example of the mortgage code whereby
businesses would be required to give Code of Conduct/Consumer
Rights information on their websites and in their advertising.
THE RIGHT
OF WITHDRAWAL
7. QUESTION 7
7.1 How satisfactory, from the consumer's
perspective, are the provisions on the right of withdrawal (Article
4(3) and Article 5)?
7.2 ANSWER
7.3 TSI and LACORS consider that the consumer
should be given no less than 14 days after the day on which the
contract is signed for cancellations.
7.4 We strongly consider that Article 5
should be amended to prevent excessive and prohibitive expenses
being applied by the timeshare business in the event of cancellations.
This may act as a deterrent to some consumers from exercising
their cancellation rights. We would prefer that there was no financial
charge imposed for cancellation within the "cooling-off"
period (as with consumer credit legislation).
7.5 We consider that there is uncertainty
over Article 5(5) fees. This should be clarified as unreasonable;
rising fees is a common complaint to trading standards.
8. QUESTION 8
8.1 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?
8.2 ANSWER
8.3 TSI and LACORS consider that the main
difficulty with this area is the different enforcement regimes
in the Member States. Consumers of countries with more stringent
national provisions face uncertainty and often disappointment
when entering into agreements in other Member States.
ADVANCE PAYMENTS
9. QUESTION 9
9.1 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))?
9.2 ANSWER
9.3 TSI and LACORS would like to see all
agreements and contracts breaching Article 6 being made invalid
and unenforceable against the consumer.
9.4 We would also like to see this made
an offence.
10. QUESTION
10
10.1 How significant a problem for consumers
have advance payments been in the resale market (Article 6(2))?
10.2 ANSWER
10.3 TSI and LACORS are aware that this
is a real problem for consumers. Consumers are left in a very
vulnerable position where resellers can increase their fees and
change the terms at any time. A number of these companies have
gone out of business meaning consumers can be left heavily in
debt.
10.4 There is no protection for consumers'
money paid in advance in cases when dealing with an unscrupulous
trader or if the trader goes out of business.
10.5 We consider that consumers may be less
inclined to use their cancellation rights if an advance payment
or other financial commitments are made.
10.6 Traders may delay paying back advance
payments in cancellation cases in order to pressurise the consumer
into staying in the contract.
10.7 The trader may use the opportunity
of discussing refunds of advance payments with the consumer to
exercise further sales pressure to keep the consumer locked into
the contact.
10.8 TSI and LACORS consider that this is
a significant problem but suggest that other potential consultees
such as ECC Net and the Timeshare Association might be better
placed to Answer this Question.
REDRESS
11. QUESTION
11
11.1 What are your views on the provisions
relating to judicial, administration and out-of court redress
(Article 9 and Article 10(2))?
11.2 ANSWER
11.3 Overseas transactions continue to be
a major concern. Any arbitration must be seen as independent and
not trade led. Existing approved ADR schemes for arbitration should
be recognised (these can be found on the Europa web site).
SANCTIONS, MONITORING
AND ENFORCEMENT
12. QUESTION
12
12.1 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?
12.2 ANSWER
12.3 TSI and LACORS consider that there
needs to be strong (criminal) sanctions and penalties must be
a deterrent. Criminal sanctions will also have the added advantage
of making POCA actions much more available.
12.4 We believe that anything less would
encourage the trade to contravene the proposed legislation. The
penalties whether financial or of a custodial nature should be
high enough as to dissuade unscrupulous traders from breaching
the legislation.
13. QUESTION
13
13.1 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?
ANSWER
13.2 TSI and LACORS consider that this is
covered.
14. OUTSTANDING
ISSUES
14.1 QUESTION
14
14.2 Are there any significant issues in the
timeshare market that the proposed new Directive has failed to
address?
14.3 ANSWER
14.4 TSI and LACORS consider that this proposed
legislation really does not go far enough to protect legitimate
business and consumers from the actions of unscrupulous traders
who leave consumers out of pocket and give this sector of trade
a bad name. For example, re-sale businesses are often the subject
of fraudulent complaints, where consumers pay money in advance
and find the business has then disappeared with no trace. We believe
that Holiday Ownership Clubs need to be included and clarification
of whom the consumer has the contract with, eg marketer, owner,
trustee etc.
14.5 We consider that it would have been
desirable to introduce a licensing scheme for traders to undertake
this type of business. This is certainly the case for consumer
credit licences where the applicant has to be a fit person to
engage in these activities. This would stop unscrupulous traders
from engaging in this trade and would act as a deterrent to anyone
wishing to breach the proposed legislation.
14.6 TSI and LACORS consider that timeshare
operators use information in breach of Data Protection Act; we
understand that a number of consumers are concerned that they
have received an unsolicited call from a timeshare/resale company.
14.7 LACORS would like to thank the following
Local Authorities for their assistance with this response: Essex
County Council, Somerset County Council, South Ayrshire Council
and West Sussex County Council.
12 September 2007
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