10 things that need to change in the timeshare industry

The National Consumer Commission (NCC) on Thursday released a long-awaited report on the outcomes of a public inquiry into the timeshare and vacation ownership industry.

The public inquiry was set up to resolve the issues in the industry as there had been numerous complaints from consumers to the NCC and the department of trade and industry.  

During public hearings, consumers who came forward complained about investing in timeshare, but then could not get a booking when needed. Another consumer shared how she contemplated suicide to get out of debt brought on through timeshare commitments.

The inquiry was led by Diane Terblanche, the former chair of the National Consumer Tribunal. Attorney Zandile Mpungose and property lawyer Audrey Ngcobo were also on the panel. NCC commissioner Ebrahim Patel approved the final report and accepted the recommendations- aimed at improving the structural and behavioural issues in the industry, which has tied up consumers in timeshare or vacation ownership contracts.

Here are the 10 changes the panel proposed:

1. Management of clubs

The panel recommended that clubs take steps to ensure their members are able to attend meetings, including AGMs. The panel addressed the changing of rules for clubs and recommended the NCC consult with relevant regulators to ensure members of clubs are in a position to influence decisions affecting their rights, responsibilities and financial obligations imposed on them.

2. Competition issues

It is recommended the NCC consult with the Competition Commission on various matters relating to competitiveness within the industry. A working group committee must be established between the two commissions to oversee matters negatively impacting consumer rights, among other things.

The NCC is also to approach the Competition Commission and the Companies and Intellectual Property Commission to investigate the industry for possible restrictive practices – such as collusion, pricing, marketing, terms and conditions associated with cancellations and with product offerings.

3. Marketing

The panel called for certain market practices to stop, such as the "enticing or seducing" of consumers through freebies such as holiday vouchers, motor vehicles and free flights. There should also be a stop to high pressure selling, inducing consumers to sign contracts under pressure by using terms like "offers are valid for today only", or "bonus points are only available today".

The panel also recommended consumers be released from their contracts – if they were concluded as a result of unfair market practices.

The industry should develop a Code of Conduct for sales consultants, agents and their clubs, they must also abide to a Code of Ethics. They should also undergo compulsory training and obtain accreditation authorising them to sell timeshare to consumers.

Vulnerable consumers – and who have allegedly been prejudiced – should be released from their contracts, the panel recommended.

4. Credit card complaints  

Allegations of reckless credit should be referred to the National Credit Regulator (NCR) for investigation. Complaints about the refusal to cancel credit agreements should also be referred to the NCR. Further, allegations of non-disclosure related to credit agreements should be referred to the NCR.

5. Contracting

The panel has warned against the commission accepting the industry's cancellation proposal for both membership and credit agreements – they might involve collusive behaviour for competitors to agree on contractual arrangements with their customers. These arrangements would be in contravention with the Competition Act.

6. Legislative reform

"A modern, industry focused, comprehensive" legislation to centralise the regulation of the timeshare industry should be passed. This is to bring consumer protection in the timeshare or vacation ownership industry in the country "on par" with the rest of the world.

The panel also proposed a new regulator be set up to ensure compliance with existing and future legislation.

7. Points in the industry

Among the recommendations dealing with points, the panel addressed expiry of points - such that consumers be notified of the imminent lapse of their points. They should be refunded the money they paid towards the maintenance of the holiday accommodation the points are associated with.

In cases where consumers could not secure holiday accommodation during any year, they should then pay a reduced levy or management fee. If consumers are faced with potential forfeiture of points due to non-availability of accommodation - the points should be carried forward until the consumer can secure accommodation accordingly with their contractual rights.

Further, a platform should be created for cashing in, exchange and re-sale of points, the panel recommended.

8. Quality of service or availability of accommodation

The proposed industry regulator will have a role to play with regard to vacational accommodation – such as ensuring member are treated fairly. The regulator will also provide independent oversight of the clubs' membership.

9. Miscellaneous matters

The panel also made recommendations regarding the confidentiality of members' information – the NCC is to engage with the relevant Ombud regarding possible violation of the Protection of Personal Information Act.

The panel also made recommendations with regard to debt collections and litigation as well as the abuse of bank accounts and debit orders.

10. Engagement with industry on existing complaints

In the short-term the panel recommends the NCC engage with the industry on a club-to-club basis regarding complaints lodged against them as have been head in the public inquiry.

Complaints which must be urgently addressed relate to consumers seeking cancellation of contracts – especially where questionable marketing practices played a role, and sales made to vulnerable groups of consumers.

The Vacation Ownership Association of Southern Africa (Voasa), welcomed the release of the report. In a statement, chief operating officer Alex Bosch said Voasa would continue to work with the NCC to "achieve the appropriate balance of rights and obligations" between consumers and the industry.

Voasa will review the report.

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