A present for our Australian friends;
Australia’s timeshare sector claims it has been unfairly swept up in the government’s proposed Future of Financial Advice reforms.
Holiday timeshare operators say they will face an ”immediate and devastating” threat if they are forced to comply with new laws designed to stamp out commissions and other conflicts of interest in the financial advice industry.
Australia’s timeshare sector, which has rebuilt itself after its notorious 1980s boom and bust, claims it has been unfairly swept up in the government’s proposed Future of Financial Advice reforms before Parliament.
The reforms would ban financial advisers from receiving conflicted forms of payment – including commissions and volume-based payments.
Timeshare products are regulated as managed investment schemes and timeshare operators are required to hold financial services licences. The sector also makes heavy use of commissions to motivate its sales staff.
But it argues that it sells ”lifestyle products”, and should therefore be exempt from the new laws. It says its salespeople more closely resemble real estate or travel agents than financial advisers, and that forcing them to abandon commissions would be akin to slapping a similar ban on the real estate industry.
In submissions to a parliamentary committee examining the proposed laws, timeshare operators warn that they could be forced out of Australia, jeopardising thousands of jobs and future investment in the already embattled tourism industry.
”Businesses in our industry have tried other remuneration structures, and they haven’t worked,” said Barry Robinson, chief executive of Australia’s biggest timeshare operator, Wyndham Vacation Resorts.
The way the legislation is worded, it doesn’t matter if it’s commissions or bonuses or any other incentive – they are basically banned under this legislation. For our sector it will be very detrimental.”
Timeshare, or fractional ownership, involves customers buying a small share in a property for the right to stay there for a number of days each year.
The industry’s big players now use timeshare ”points”, which can be traded and used at different sites around Australia and overseas. Australia has 78 timeshare resorts, with an annual occupancy rate of 86.5 per cent, according to a report released by the Australian Timeshare and Holiday Ownership Council late last year.
The council’s figures show that Australia had 152,000 timeshare ”owners” in 2009, 20 per cent more than in 2005.
A spokeswoman for Financial Services Minister Bill Shorten said the government had met industry leaders to discuss their concerns.
”To the extent that the timeshare industry provides financial advice to retail clients, it is subject to the reforms,” she said. ”The government … is considering their concerns in order to determine whether any changes are necessary.”
Australia’s timeshare industry has rebuilt following a collapse in the late 1980s, when it gained a shady reputation thanks to its high-pressure sales tactics and complex products.
The industry insists it is now well regulated, and that its major operators – which include Wyndham, Classic Holidays and the Accor Vacation Club – adhere to an industry code of conduct. Mr Robinson said that 70 per cent of Wyndham’s sales were to repeat customers. ”You don’t do that if you don’t like the product,” he said.
But the Consumer Action Law Centre in Melbourne said it still received regular complaints about timeshare operators – with 16 Victorian cases received last year. Many of the complaints involved ”high pressure selling techniques through seminars,” it said.
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