Examination of Witnesses (Questions 120-128)
Mr Gareth Thomas, Mr Kevin Davis and Ms Berenice
Napier
18 OCTOBER 2007
Q120 Baroness Howarth of Breckland:
You gave a very clear answer to the Chairman about information
generally but I just wondered if I could hone down on the requirements
to be "proportionate and relevant" because there may
be areas in which the Commission are being a little too imaginative.
In the issue about information, the specific details that are
required by the Directive include things like access to saunas.
Do you think that someone in the Commission should be looking
at that list and asking whether the things that are included are
necessary and proportionate and whether there are things that
also might have been missed out in terms of information? One of
the issues about being a consumer is that too much information
for some consumers leads to confusion and the real point that
they want to know, about cooling off periods, might be just lost
in the list of other very exciting stuff like "Can I get
in the sauna?"
Mr Thomas: You are tempting me down a
route I am not sure I particularly want to go. Let me deal with
the substance of your point. We do not think the revised Directive
as yet properly reflects our views, and clearly yours, Baroness
Howarth, about the degree of proportionality there needs to be.
That is one of the issues that we are continuing to take forward
in the Council working group sessions which officials take part
in. There are a series of information requirements where we think
further clarity is required and we continue to make the case for
them. Kevin, any more information on saunas?
Mr Davis: Yes. I think the important
thing, and it is certainly our intention, is to ensure that consumers
have enough information so that they know what they are getting
into and what their entitlements would be. I think the mention
of saunas is in the context of giving an example of the kinds
of things which are emblazoned in the sales technique to say how
wonderful this product is going to be, and if something is said
within the sales process, which is what the Directive is about
really, then that should become part of the contract. It is getting
a balance between the pre-sales information, which we do not want
to go over-burden business with, or consumers, but also bearing
in mind that that information under the Directive becomes part
of the contract and that is very important. That is an important
element of this Directive because it directly transposes what
is said in the sales process into the contracts and I think we
take the view that that is an important element to retain but
we do need to take a lot of time over getting the information
correct.
Q121 Lord Wade of Chorlton: I have
a question about timeshare owners' rights post purchase. A number
of witnesses have expressed concern about an omission from the
Directive of any provisions relating to timeshare owners' rights
after the purchase has taken place. I wonder what view the Government
have on this matter.
Mr Thomas: We have some sympathy with
some of the concerns in this area. I do not think it is true to
say that there are no provisions in terms of timeshare owners'
rights after purchase but there does have to be clarity about
ongoing costs and how those costs are arranged. One of the particular
points where we have sympathy is the idea that there need to be
details about the possibility for and the consequences of discontinuing
your contract. That is one of the things that we are continuing
to press, again, in the Council working groups at the moment.
Q122 Chairman: We have some questions
about cooling off periods arising out of your letter. Our specialist
adviser has had the opportunity to read the letter and he is an
expert on the subject and understands it immediately. The first
point was the view that the case has not been made for applying
a separate cooling off period to exchange contracts. It would
be helpful if we had a little clarification on that. It is not
clear whether this is something that is being deliberately proposed
by the Commission or whether it simply follows on from the drafting.
It would be very helpful to have clarification on that. The second
point was about the case for the cooling off period in respect
of resale contracts and whether that was also a drafting matter
or whether there was a separate issue there which we are not fully
aware of.
Mr Thomas: Just on the exchange contracts,
if you think about it, when you want to take part in an exchange
contract, you have to have something to exchange in the first
place so you will have had to have bought a timeshare in order
then to be in a position to take out an exchange contract so you
will by definition already have had a two-week, 14-day cooling
off period. Our view is that to have then a further two-week cooling
off period is unnecessary, is disproportionate. Has the Commission
just made a mistake? They have certainly transposed the existing
Directive into this scenario and we are continuing to highlight
this to them. Forgive me, just tell me the second question about
resale again.
Q123 Chairman: It was about the cooling
off period in respect of resale contracts. It just needed a bit
of amplification as to what the issue is there and what the point
of debate in the Council working groups was.
Mr Thomas: Again, in terms of the cooling
off period, if you go to a resale agent, you will not have to
put any money up to the resale agent up front. No money will be
exchanged until the timeshare is solved, so again, we do not think
there is a need for the two-week cooling off period because no
money will have changed hands at the point at which the contract
is signed.
Q124 Chairman: Just to follow up,
is that view is shared by other Member States or is there a discussion
going on about it at the present time?
Mr Thomas: There is a discussion going
on about it.
Mr Davis: Just one other point on that.
Given that there is no money required for resale services up front,
it is also quite possible, in our view, that a 14-day cooling
off period might well delay the service to the consumer because
the traders will not want to do anything until they know there
is a contract in place, irrespective of whether they have got
their hands on any money and in terms of resale, which is all
about taking the opportunity to find a buyer on behalf of the
consumer, that might work against the consumer's interests potentially.
Q125 Chairman: So it is really an
appreciation of what you might call the market and how it operates—I
do not mean the Common Market; I mean the market in property.
That is what is leading your view on this matter?
Mr Thomas: Yes.
Q126 Chairman: The last thing we
would like to hear from you is what is the progress of negotiation
at the EU level, both at the Council and the European Parliament,
and what are the major outstanding issues of dispute, if any?
Mr Thomas: I do not think there are any
major issues of dispute. I think we have succeeded in our objectives
of getting agreement that holiday clubs should be brought into
the Directive, that there is a need to broaden the definitions
and also bring resale agents in. We are still in discussion about
the detail. I am expecting to go to the Competitiveness Council,
where we are expecting the Commission to give us an update on
progress. We hope that the Council will be able to reach a view
shortly thereafter. The European Parliament has to look at this
too. We are expecting at the moment that the European Parliament
will give their view roughly around April, so the timescale that
I gave you initially of hopefully 2009 for implementation is where
we are at but I would propose to continue to keep the Committee
informed of progress and we can tell you whether that timetable
speeds up or slips.
Q127 Chairman: I am sure the Committee
would be grateful for that. Is there a discussion still going
on or has there been such a discussion on the linkage between
this proposal and other consumer legislation? That is one of the
subjects which crops up every now and again.
Mr Thomas: There is a much broader review
taking place, as we have touched on. Obviously, we are keeping
in view what will come through that review process but we have
always held the view that a Timeshare Directive was necessary
because timeshare has particular problems and it has a combination,
or has had in the past, of particularly unsavoury marketing practices
and the need for consumers to have particular individual rights.
We have always believed that a specific Directive would best capture
that. That does not mean to say that other Directives will not
be useful. The Unfair Commercial Practices Directive, for example,
will help to ban high-pressure selling and in that view will be
useful but it is not enough on its own, in our view, and that
is why we have wanted to retain the Timeshare Directive and indeed
revise it and improve it.
Chairman: Thank you, Minister. Does anybody have
any more points they wish to raise?
Q128 Baroness Howarth of Breckland:
I wondered in what way our Report might be helpful to you because
obviously we shall produce a Report with our own recommendations
and you are making what sounds like quite a lot of progress. In
what way might we be helpful in terms of taking the issues forward?
Mr Thomas: Broad support for the Government's
view is always appreciated, Baroness Howarth. I am sure the European
Parliament will read with interest the comments of this Committee
and, indeed, the Committee in the other place, but any support
for the broad thrust of what we have described would genuinely
be helpful.
Chairman: Certainly the view of the European Parliament
is one which is very important because they are clear decision
takers. I always think it is quite difficult to predict how they
are going to respond because it is such a different sort of parliament.
Minister, you have been, as always, concise and helpful. Thank
you very much for coming before us today and congratulations on
getting an awful lot of information across and we still have not
got to 11 o'clock.
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