Memorandum by MEPs
INTRODUCTION
My Committee has lead responsibility in the
European Parliament for timeshare legislation, and has begun its
deliberation on the Commission's latest proposals. We held a Public
Hearing on 28 June with contributions from the following:
Commissioner Meglena KUNEVA, Commissioner for
Consumer Protection
Peter VAN DER MARK, Secretary General, Organisation
of Timeshare in Europe (OTE)
Sandy GREY, Chairman, Alliance of Timeshare Consumers
in Europe (ATCE)
Carlos VOGELER, President of the National Association
of the Timesharing Industry (ANETC)
Henry BANKES, Vice President—Legal Affairs
of Group RCI
Jutta GURKMANN, Director European Consumer Centre
Kehl (Germany)
Michael HALEY, Head of European Enforcement Team,
Office of Fair Trading (UK)
Hans DE CONINCK, Tourism Expert—"Test
Achat", Belgium Member of BEUC, the European Consumers' Organisation
Alex RADFORD, Solicitor, De Cotta McKenna and
Santafé
The Committee will be producing proposals for
amendments the coming months. As an elected Member of the European
Parliament for the North West I have received and continue to
receive many complaints on timeshare.
The Committee first raised the problems with
existing timeshare legislation in November 2001, when the Committee
organised a hearing in the European Parliament. The European Parliament
then adopted a resolution[3]
calling for the Commission to propose further legislation in June
2002. I attach that resolution alongside this submission.
The UK is amongst the most affected Member States
both in terms of consumers owning timeshare, in the UK and abroad
and in terms of the size of its domestic timeshare industry. The
UK industry is estimated to be worth a total €157 million
per year, according to the impact assessment conducted by the
Commission.[4]
The UK has more timeshare owners than any other European country.
In 2001, 31.6% of all timeshare owners in Europe were residents
of UK.[5]
In 2006 UK European Consumer Centre (ECC) had
the second highest number of complaints after Germany, receiving
341 complaints related to Timeshare, other long-term holiday products,
resale and exchange.[6]
Consumer Timeshare organisations have contacted
us demanding protection for consumers from fraudsters and scam
merchants when making such major financial decisions.
OVERVIEW
Binding legislation is needed to safeguard timeshare
consumers. Without a European wide framework of legal rights and
redress the perception of the timeshare industry as a "problem"
will persist, and UK law cannot adequately cover problems in popular
Member State destinations such as Spain, Portugal, and growing
new markets such as Bulgaria. An important role does exist however
for joint enforcement action.
A code of conduct was introduced, developed
by the Organisation of Timeshare in Europe (OTE), but this has
not been sufficient. I have received many complaints from timeshare
consumers about companies that did not comply with the requirements
of the OTE code of conduct. It is a problem of enforceability.
The high proportion of rogue traders in this
market, its relative lack of maturity, and the large amounts of
money involved for consumers mean that self-regulation alone cannot
achieve our aims.
However, it has proved difficult to ensure that
the law keeps up with the development of new products and in particular
with those rogue traders who develop "timeshare-like"
products to ensure they fall outside the law. Rogue traders also
continue to break the law, for example in taking deposits during
the cooling off period.
The main strengths of the existing Timeshare
Directive[7]
are the mandatory cooling-off period, the ban on fee taking during
this period, and the precontractual information requirements,
applicable to all products that fall under the scope of the Directive.
The cooling-off period is essential as it gives the consumer the
right to withdraw from the contract within a certain period of
time. This period of time is needed for consumers to think about
what they have done in a calm environment, reducing the risks
of pressurised hard selling techniques. Precontractual information
is also essential to ensure consumers can make an informed choice.
However I still receive many complaints from
consumers experiencing weaknesses in the current Directive. The
main source of these is the tight definition of timeshare. All
too often disreputable companies have simply redesigned their
products to avoid falling within the existing Directive. These
"timeshare-like" products, such as timeshare products
for a period of less than three years (as required in the Directive)
are a major problem. Furthermore products such as holiday clubs
that are often sold in a similar way to timeshare also fall out
of the coverage of the current Directive. It is important to close
these loopholes, and to do so in such away that prevents disreputable
traders simply redesigning their products further to avoid this
necessary regulation.
According to the Commission's impact assessment,
in the first half of 2006 76,9% of complaints were about long
term holiday products, 17,3% about resale and only 5,8% about
timeshare. Of the letters I have received, more than half of them
are about long term holiday products. Those figures clearly show
that the first problem that needs to be address is extending protection
to consumers when they buy a long term holiday product.
Consumers have also raised with me incidents
of timeshare resellers asking for upfront fees, with resellers
wholly outside the existing scope.
The new directive extends the scope to long
term holiday products and resale, the ban on upfront fees for
resale, and a proposed increase in the cooling-off period, as
well as timeshare on non-fixed properties such as boats and caravans.
The Committee will analyse whether the 14 days proposed is sufficiently
long to ensure holiday makers have had time to return home and
reflect carefully on purchases made whilst on holiday.
SCOPE AND
DEFINITIONS
In order to avoid the weakness in the existing
legislation, the definition of timeshare should be as broad as
possible to protect consumers against rogue traders.
With a view to improving consumer protection,
the scope should be extended to long term holiday products and
resale. This extension of the scope will grant consumers equal
protection when buying these products as when they buy timeshare
products. This will increase consumer confidence in all timeshare
and timeshare-like products, to the ultimate benefit of both consumers
and the responsible sector of the industry.
Particular consideration of the extended definition
is needed to prevent further loopholes being left for future exploitation
by those less reputable traders. A recent Delegation from my Committee
to Portugal had interesting discussions with authorities there
in relation to the enforceability and coverage of timeshare legislation,
and I welcome further input from all Member States.
It has been raised with the Committee that special
attention should be given to the definition of long term holiday
products, to ensure that services such as staff association clubs
which help people get discounts on accommodation and holidays
are not inadvertently brought into scope.
INFORMATION PROVISION
Information requirements are essential to consumers.
The new information provisions could include two more elements:
calculation and evolution of management fees, and an indication
of availability for long term holiday products, both issues frequently
raised by consumers.
Generally, consumers need to be informed where
they are most likely to be approached; ie when they are on holiday,
just before being attracted to sign timeshare or timeshare-like
contracts. The Office of Fair Trading (OFT) has conducted several
campaigns in airports or airline magazines. I think this is an
excellent initiative that could be extended in Europe, targeting
the main countries involved.
The law can provide protection but there is
no substitute for a well informed consumer who can resist pressure
selling and are confident and informed enough to shop around in
advance if they wish to purchase such products and compare offers.
RIGHT OF
WITHDRAWAL
Consumers should be aware that they are protected
by the right of withdrawal in every European Member State. In
order to give greater clarity to this right it is essential to
have only one method of calculating days, such as the proposed
calendar day methodology.
ADVANCE PAYMENTS
Many consumer complaints focus on advance payments
in relation to resale. Generally, timeshare owners are contacted
by traders and offered a good price for their timeshare. This
price is very attractive, even though timeshare resale prices
are in reality very low. Then the agent takes an upfront fee and
disappears with it.
The development of the rogue resale market is
due the opportunity of charging upfront fees. With a clear ban
of advance payments, these rogue traders will decrease, as it
was the case in 1997 with the entry into force of the ban on advance
payments for timeshare by Directive 97/47/EC.
REDRESS, SANCTIONS,
MONITORING AND
ENFORCEMENT
Satisfactory out of court redress is clearly
preferential for consumers than lengthy and potentially costly
court procedures, and Alternative Dispute Resolution should be
made more widely available by the legitimate industry. However
experience had shown that it is not always enough. In the evidence
I have received, many consumers tried to solve their problems
through OFT or OTE but were not satisfied with the results.
The OFT is a very good tool, but does not act
for individuals or seek redress for them. Furthermore the OTE
mechanism applies only for OTE members. Rogue traders will continue
to operate outside the OTE.
The Unfair Commercial Practices Directive (UCPD)
will ensure complementary legislation is introduced in all Member
States to tackle all forms of aggressive and misleading selling.
Tackling these unfair sales tactics will drastically improve the
timeshare industry. However the UCPD is a broad horizontal tool,
not designed to deal with specific issues of the timeshare industry.
Given the scale of problem selling and the very poor image of
the industry, there remains a need for specific sectoral legislation
that will work together with the UCPD to improve the situation
for consumers, and for the responsible actors in the industry.
In order to counter problems with enforcement,
more cooperation between enforcement bodies and administrative
authorities is needed. In this context I hope the new Consumer
Enforcement Network, launched by the Commission across Europe
at the start of 2007, will make a real difference. Ensuring correct
transposition and effective implementation of legislation is a
priority for my Committee, and we will monitor the Member States'
performance closely to ensure they are meeting their obligations
under this law.
1 October 2007
3 PE 298.410 Report on the monitoring of Community
policy on the protection of purchasers of the right to use immovable
properties on a timeshare basis (Directive 94/47/EC) (2000/2208
(INI)). Back
4
SEC (2007) 743. Back
5
SEC (2007) 743. Back
6
According to the impact assessment conducted by the Commission,
SEC (2007) 743. Back
7
Timeshare Directive 94/47/EC. Back
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