On 23 February 2011 new Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the Regulations) came into force and apply across the UK. The Regulations transpose into UK law EU Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, re-sale and exchange contracts.
The ultimate aim of the Regulations is to enhance consumer confidence (has this been achieved) in the timeshare industry in the UK and eliminate the operations of rogue traders which cause considerable problems for consumers.
In brief, the Regulations apply to the sale and marketing of the following types of contract:
- a timeshare contract – a contract of a duration of more than one year;
- a long term holiday product contract – a contract of a duration of more than one year;
- a resale contract – a contract under which a trader, for consideration, assists a consumer to sell or buy a timeshare or a long term holiday product; and
- an exchange contract – a contract under which a consumer, for consideration, joins an exchange system which allows that consumer access to overnight accommodation or other services, in exchange for granting to other persons temporary access to the benefits of the rights deriving from that consumer’s timeshare contract.
The Regulations replace entirely the old regime in the UK by repealing the Timeshare Act 1992 and revoking the Timeshare Regulations 1997. Ancillary regulations and orders (such as the Timeshare (Repayment of Credit on Cancellation) Order 1992) also fell when the Act and the regulations were removed.
The purpose of this note is to provide an overview of the background to, and the main provisions of, the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010.
Introduction
The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (SI 2010/2960) came into force in the UK on 23 February 2011. These new rules set the conditions for fair trading in timeshares and other holiday products.
The Regulations implement in the UK European Directive 2008/122/EC and replace the Timeshare Act 1992 as amended by the Timeshare Regulation 1997. A Government consultation on the transposition of the European Commission’s new Timeshare Directive into UK law closed on 1 October 2010.
In announcing the new regulations, Edward Davey, Consumer Minister, said:
“These products [timeshares and holiday products] are often sold across borders, so it’s only right that we have protections in place for consumers that also cross borders.
Knowing these regulations are in place will boost consumer confidence and boost business for legitimate traders”.
Background
Failings of the previous regulatory regime New Directive 2008/122/EC replaces Timeshare Directive (94/47/EC). This new Directive was considered necessary because there have been major developments in the marketplace. New products and schemes have been developed but, under the old directive, consumers who bought them did not always get the same rights or levels of protection as those who bought more conventional timeshares, particularly in relation to cancellation rights.
By way of illustration, new holiday products include:
- holiday club schemes (i.e. membership of the club is not linked to any rights in any particular property) http://nds.coi.gov.uk/content/Detail.aspx?ReleaseID=417087&NewsAreaID=2
- timeshare resale and subsequent management
- timeshare in floating vessels (e.g. narrow boats, pleasure boats and houseboats)
- timeshare lasting less than three years
The fact that long-term holiday products, re-sale and exchange schemes were not automatically covered by the Timeshare Directive (94/47/EC) and its rules on cooling-off periods, cancellation rights, deposits and consumer information was seen as a loophole that should be closed. Consumers who signed up to these new products under pressure had little scope to change their mind.
Consultation on a new regime
In June 2006, the European Commission launched a public consultation on Timeshare Directive (94/47/EC).
The Commission noted that:
Timeshare contracts entitle consumers to spend a period of time (at least one week) in a holiday property for at least three years. The Timeshare Directive sets minimum standards for consumer protection throughout the EU, such as ensuring that consumers receive adequate information on the property. The legislation also seeks to prevent “pressure selling” by allowing for a cooling off period where withdrawal is possible and money deposits are not allowed. However, some operators have introduced new timeshare-like products which take advantage of regulatory loopholes, leading to a number of complaints by consumers […] Since the Timeshare Directive was adopted in 1994, a number of new products have come onto the market, such as contracts which are similar to timeshare, but where the contract is for 35 months (so called “timeshare-like products”). Other new products include “travel discount clubs”, whereby consumers pay a membership fee.
The consultation confirmed that there were serious consumer problems related to some holiday discount clubs, timeshare resale and exchange. The consultation paper can be found at: http://ec.europa.eu/consumers/cons_int/safe_shop/timeshare/consultation2006_en.htm
Following on from this consultation, on 7 June 2007, the European Commission adopted a proposal for a new Timeshare Directive to enhance consumer protection by extending the scope of the current rules to include new timeshare products and post-contractual issues. A new Directive (2008/122/EC) was adopted on 12 December 2008.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk