Bindi Shah only found out that she can’t get out of the 71-year Classic Holidays timeshare scheme she signed up to in 2014 when she recently called to ask.

The curt response from the Classic Holidays consultant was a far cry from how the whole thing started. She was handed a scratch-and-win card at a shopping mall that promised a free holiday as long as she attended a Classic Holidays timeshare seminar in the Sydney suburb of Parramatta.

There she was effusively promised discounts of up to 50% on accommodations around Australia. All she had to do was pay $22,000 up front to join the scheme, which she did, and then pay the annual fees. These have gone up steadily and now come in at around $3000.

The program seemed to deliver what it promised at first, though the 50% discounts never came through and the complicated points system made it impossible to know if she was really getting a bargain. Now Bindi, who is 63, is sure that not using the scheme is more cost-effective than using it, even though she has to keep paying the fees.

“In recent years, we have consistently found accommodation prices through Classic Holidays to be higher than those offered by public online travel platforms such as Booking.com,” Bindi says.

“Plus, the scheme’s restrictive cancellation terms compare unfavourably with the flexible 24‑hour cancellation options commonly available elsewhere.”

“Not only is it more expensive, but there are all these restrictions and conditions. There’s no flexibility at all. The value proposition of the scheme has deteriorated significantly.”

Bindi’s understanding is that her scheme runs until 2085 – far longer than she’d like to keep it. But when she recently contacted Classic Holidays to cancel it, she was shocked to learn that she couldn’t. This came as news to her. It would mean an additional $177,000 in fees by the time the scheme comes to an end, and that’s only if they stayed at $3000 a year, which is unlikely.

“Nowhere in the contract anywhere can I find that you can’t cancel,” Bindi says. “And when we originally signed up, there was no explanation that there was effectively a no exit clause for the membership.”

Regulations only go so far

This story of being stuck in a timeshare scheme is just one of many that ����Vlog has reported on. We also surveyed 351 timeshare members in 2021, around 30% of whom said they would have liked to cancel their membership but couldn’t.

In 2018 we handed a Shonky award to Marriott Vacation Club, a 40-year timeshare scheme whose costs for a one-week booking per year were 938% more over the life of the contract than similar accommodations available on online booking sites.

Marriott’s scheme may have been the worst of the bunch at the time, but we also pointed out that the value for money propositions from other timeshares schemes – including Accor Vacation Club, Classic Holiday, Ultiqa Lifestyle, Wyndham WorldMark South Pacific Club – were also extremely poor.

A timeshare scheme is a financial product and operators need to have a financial services licence, which all the major ones do.

It’s a credential that would seem to confer a sense of above-board legitimacy, but timeshare schemes operate on the dark fringes of the financial sector. Nonetheless, they are regulated by the Australian Securities and Investments Commission (ASIC), which has taken steps to provide better protections for timeshare customers in recent years. ����Vlog was involved in the consultations leading up to these changes.

In 2020, for instance, ASIC imposed new rules around fee transparency and hardship support. The regulator also made it mandatory to let prospective members know both in writing and verbally how these complicated schemes actually work and the risks they involve.

����Vlog has lodged five official complaints with ASIC about timeshare schemes since 2016. In 2021, we lodged a “super complaint” to ASIC, alleging at least eight industry-wide breaches of financial services laws.

But regulations only go so far when the deal is financially unsound to begin with. ASIC makes clear that two of the most concerning conditions of these schemes – that the only way to get out of one is by selling it, and that they pass on to your children – are enforceable, though the Classic Holidays contracts that ����Vlog has reviewed don’t contain these terms.

Passing it on to her children

Bindi has tried to persuade her children to use her Classic Holidays bookings, but they say it’s much easier and cheaper to just book directly with the property or through an online booking service. They don’t want any part of Classic Holidays, even though they’re apparently due to inherit the scheme along with the annual fees. This is a condition that timeshare members discover when they try to exit a scheme. It is not included in the Classic Holidays contracts that we’ve reviewed.

It has also been widely reported that timeshare schemes are very difficult to sell, but that wouldn’t be an option for Bindi anyway.

“The Classic Holidays consultant suggested that I could use one of their brokers to sell the membership for a fee. I told him that I felt it would be unethical to sell the scheme to someone else,” Bindi says.

“If they had said, ‘you know, you won’t be able to get out of this’ from the beginning, then we might have thought twice about it. How can you have someone having a managed scheme where there is no way out? It’s just unethical.”

We asked Classic Holidays to provide examples of documents provided to members saying they can’t exit the scheme and explaining that it goes into a member’s estate upon their death. We didn’t get a response.

Facts you need to know about timeshare schemes

• Timeshare operators are required to be members of the (AFCA). If you feel you’ve been misled by a timeshare operator, lodge a complaint with AFCA.
• If you’re in financial hardship, ASIC regulations allow timeshare operators to release members from schemes in cases where the scheme constitution permits hardship withdrawals.
• If the timeshare operator has arranged finance for the initial lump sum membership payment ($22,000 in Bindi’s case), you can cancel the scheme even after the cooling off period if the loan has not yet been provided.
• In 2022, the Federal Court found that the timeshare scheme Ultiqa breached financial advice laws by failing to take the best interests of target customers into account and leading them into schemes they couldn’t afford. If a timeshare scheme has arranged finance for your membership, you may be able to challenge whether the advice you received was appropriate for your circumstances. 
• If you’re trying to sell a timeshare scheme, be particularly wary of scammers posing as brokers or resellers. 

The post She’s 63 and wants out of her timeshare, but she’s locked in until 2085 appeared first on ����Vlog.

In the wake of a May 2022��federal court decision that found holiday timeshare scheme provider Ultiqa violated financial advice laws, the business has now been slapped with a $900,000 penalty in a case brought by the Australian Securities and Investments Commission (ASIC).��

“Ultiqa prioritised sales over appropriate advice and ultimately consumers’ best interests,” says ASIC deputy chair Karen Chester.

“The penalty against Ultiqa, the first against a timeshare provider, sends a further significant message to the timeshare industry. When sold alongside financial advice, it is both fundamental and legally required that the advice is in the consumers’ best interests.”

Five official complaints to the regulator��

����Vlog has lodged five official complaints with ASIC about timeshare schemes since 2016.��

In 2021, we lodged a ‘super complaint’ to ASIC about the industry as a whole, alleging at least eight industry-wide breaches of financial services laws.

In the May 2022 ruling, the court held that Ultiqa had failed to act “efficiently, honestly and fairly”, in part by not properly supervising its sales staff, who often relied on pressure tactics to sign up customers.��

The sales tactics were, in effect, a form of financial advice – advice that was often inappropriate to the customer’s financial circumstance.

An Ultiqa sales manual that came to light in the May case instructed that if prospective customers indicated that they wanted to leave the sales seminar, salespeople should “do everything you can do to amuse, interest, excite, relax, humour, flatter and if necessary cajole your clients into staying”.

‘They got nothing for their money’��

Most Ultiqa customers took out loans from a company affiliated with the timeshare provider to pay for their schemes. Upfront costs ranged from $10,000 to $25,000, with ongoing yearly fees of up to $800.

“Despite these significant costs, many could not even book holidays in their timeshares due to a lack of availability – meaning they got nothing for their money,” says Chester.

Many timeshare schemes keep customers locked in contracts lasting as long as 99 years, with no means of escape.

In May 2021, we published the results of a survey that indicated widespread dissatisfaction among timeshare members.��

Seven in 10 of the 351 members we heard from said their long-term schemes would pass on to their children, who would then be stuck with the yearly fees. Almost one in three said they’d like to leave their schemes, but couldn’t. A further one in 10 said they were thinking about leaving.

����Vlog welcomes decision

“We welcome the decision of the Federal Court, which highlights the predatory sales practices of the timeshare industry,” says ����Vlog head of policy Patrick Veyret.��

“The industry is founded on pressuring people into expensive and lengthy schemes which are incredibly poor value. The timeshare industry is now on notice. It must clean up its harmful sales practices or face further regulatory action.”

The post Ultiqa timeshare scheme hit with $900K penalty for violating financial advice laws�� appeared first on ����Vlog.

Pressure sales tactics have long been standard procedure at holiday timeshare seminars, with attendees pushed to sign up on the spot, hand over up to $25,000, and commit to hefty yearly fees.

Many come to regret falling prey to the timeshare hard sell, and end up stuck in schemes they don’t want and can’t use. Some are locked in for up to 99 years and will see their schemes��pass on to their children.

����Vlog has been exposing deceptive practices in the timeshare industry since 2016. Since then, we’ve lodged five official complaints with the Australian Securities and Investments Commission (ASIC), alleging unlawful conduct in the industry.

‘Super complaint’

In 2021, we lodged a ‘super complaint’ to ASIC, alleging at least eight industry-wide breaches of financial services laws. (A super complaint highlights a longstanding systemic issue within an industry.)

At the same time, we published the results of our��timeshare customer survey, based on the input of hundreds of timeshare members – a significant portion of whom said they wanted to exit their schemes but couldn’t.

Verdict – Ultiqa breached financial advice laws

One of our earlier complaints to the regulator focused on the quality of financial advice given by salespeople for the timeshare scheme Ultiqa Lifestyle.

ASIC followed up and has now won a case in Federal Court against Ultiqa Lifestyle Promotions, the part of the business that set up financing for new members.

The Court found that Ultiqa salespeople breached financial services laws by failing to make sure the advice they gave prospective timeshare members was in their best interests.

ASIC hails ‘important decision’

“This is an important decision for consumers and ASIC’s first financial advice action against a timeshare provider,” says ASIC deputy chair Karen Chester.

“Pressure sales tactics used, and even documented in their sales manuals, encouraged sales agents to ‘corner’ consumers into investing in a timeshare scheme that many could not afford.��

“Despite paying tens of thousands of dollars in upfront costs and ongoing fees, many could not even book holidays in their timeshares due to lack of availability – meaning they got nothing for their money.”

Ultiqa sales manual: ‘Do not let them leave’

During court proceedings, sections of the sales manual used at Ultiqa’s timeshare seminars came to light, offering a glimpse into a sales culture that characterises the industry as a whole.

One section reads: “Once your client is on the Sales Deck they come to the grim realisation that this is a sales environment and what is going through their mind is ‘How can we get out of here?’, and, if you give them the chance, they will. DO NOT GIVE THEM THE CHANCE! Do everything you can do to amuse, interest, excite, relax, humour, flatter and if necessary cajole your clients into staying.”

Many who stayed and signed up are still looking for a way out of their schemes, with no help from their timeshare providers.��

Timeshare industry ‘now on notice’, says ����Vlog

Based on our ongoing research and investigations, the findings against Ultiqa highlight common practices.

“These sorts of practices are rife across the timeshare industry, so this decision sends a huge warning to other timeshare salespeople and operators,” says ����Vlog CEO��Alan Kirkland.

“The timeshare industry is now on notice. Its sales practices and contract terms need to change – otherwise operators should expect more court action.”

The post Ultiqa timeshare sales tactics breached financial advice laws appeared first on ����Vlog.

The Australian Securities and Investment Commission (ASIC) has taken legal action against timeshare scheme Ultiqa Lifestyle for providing financial advice that went against the best interests of its members.

It’s the first time the regulator has started civil penalty proceedings against a timeshare operator for offering advice that was inappropriate to the recipient’s circumstances.��

ASIC deputy chair Karen Chester says, “The timeshare industry is on notice to ensure existing compliance and advice practices comply at all times with the obligations on all financial advisers.”

From October 2017 to March 2019, authorised representatives of Ultiqa sold people into schemes with upfront costs from $10,000 to $25,000 and ongoing fees of up to $800 per year, according to ASIC.

Many members didn’t know what they were getting into.

“Timeshare schemes are complex financial products,” Chester says. “They can be difficult to understand and compare with other products, and involve long-term financial commitments. Consumer harm can [result] and has resulted when consumers are not aware of the upfront costs, ongoing fees or the nature of their investment – like how easy, or not, it is to exit [the scheme].”

ASIC also alleges that Ultiqa’s conduct amounted to a breach of its obligations as an Australian financial services licensee to act “efficiently, honestly and fairly”.

‘Many potential breaches of law’

“Since 2016, ����Vlog has written five complaints to ASIC about potentially illegal conduct within the timeshare industry,” says ����Vlog director of campaigns Erin Turner.

“����Vlog has observed so many potential breaches of law that we question whether the timeshare industry should be allowed to operate with existing business practices.”

In 2017, ����Vlog filed a complaint with ASIC after Ultiqa pressured a couple into purchasing a timeshare contract with finance that could have lasted until 2081, despite the individuals telling the operator they were financially stretched.

In May this year we reported that 70% of the 351 timeshare members we surveyed said their long-term schemes will pass on to their children, who will have to pay the yearly fees.

Almost 30% said they’d like to leave their schemes but can’t, and another 12.5% say they’re thinking about leaving.

In late October we reported that Classic Holidays, Accor Vacation Club and Ultiqa had elected not to extend the right of hardship relief to their members.

“Timeshare salespeople are providing financial advice,” Turner says. “That means they have a legal obligation to act in the best interest of their customers. Despite this, timeshare operators typically only recommend one product – their own.”

Although Ultiqa stopped selling interests in January 2020, the scheme remains active.

The post ASIC takes timeshare operator Ultiqa Lifestyles to court�� appeared first on ����Vlog.

Major holiday timeshare providers Classic Holidays, Accor Vacation Club and Ultiqa have elected not to extend the right of hardship relief to their members. Their decision forces people trapped in their schemes to continue paying fees for a service they don’t want and can’t use.

Hardship relief would allow timeshare members to get out of schemes in cases of permanent job loss, ongoing financial hardship or illness. (Without adding the ASIC definition to their constitutions, schemes may still allow hardship relief on a case by case basis, but it won’t be mandatory.)��

But being let out of a long-term legacy timeshare scheme for hardship reasons can only happen if the member’s interest is sold to someone else, a difficult proposition at all times and a near impossibility in the current COVID-19 climate.��

Tough market behind operators’ decision

Due to an exemption from ASIC regulations, the boards of some timeshare schemes, particularly long-term legacy schemes, have the option of not amending their constitutions to include hardship provisions.��

Classic Holidays, Accor Vacation Club and Ultiqa all sent notification to their members in recent weeks saying the respective timeshare boards had voted not to extend the hardship option because, in effect, they wouldn’t be able to find new members.��

“Classic is not currently selling interests in the Club and does not anticipate it will commence reselling interests in the Club in the foreseeable future,” Classic Clubs Limited (the responsible entity for Classic Holidays) says in its notice.��

Accor Vacation Club’s notice says the scheme “has determined, based on existing trends and a decrease in demand for timeshare products, that the responsible entity is likely not capable of achieving the resale of memberships in a timely fashion at the same rate that members may seek to withdraw from the club”.��

Ultiqa Lifestyle told ����Vlog in a statement that it “has elected not to change the constitution to incorporate hardship arrangements but does have a robust hardship policy in place and is happy to work with our members if at any time they suffer hardship”.

(In February 2020, Ultiqa stopped selling new members into the scheme, saying “the current economic environment, compounded with proposed regulatory changes, means that it is no longer viable to continue sales activities.”)

Members disappointed, but not surprised��

Under ASIC guidelines, the schemes had until 30 September 2021 to make that decision and communicate it to affected members.

Many of the affected members we’ve heard from are not happy about their scheme’s decision, or surprised.��

One Classic Holidays member, who recently ended his membership, simply told us, “I am not surprised they are taking steps to close off the hardship option.”��

Another Classic Holidays member says, “My husband and I have owned the timeshare since 1988 and now wish to conclude our membership. We are no longer able to travel due to health reasons. We are 80 and 76 years old. We have refused to pay the fees for the last four years and do not want to be involved with this company. We are prepared to give it away for no remuneration.”��

An Ultiqa member says, “We received the letter and were quite pleased when the first paragraph said they were going to help, but further paragraphs said no. As usual they are very determined not to help in any way.”��

We also heard from a number of Accor Vacation Club members.��

“Accor acknowledges that there is a distinct lack of interest in buying timeshares, particularly during COVID,” one member told us. “It therefore sees the solution is to deny any help to people who are unable to continue with the membership for financial or other reasons and continue to demand that they pay their annual membership fee.”��

Another Accor member who’s unhappy that hardship relief is off the table says, “We would like to escape but believe it is not possible.”

Accor to let members’ children off the hook��

With the schemes electing not to add a hardship relief clause to their constitutions, we asked Classic Holidays and Accor to outline any relief that may still be available to members in hardship circumstances.��

Classic Holidays declined to answer the question.��

An Accor Vacation Club spokesperson told us “we will continue to discuss any extenuating circumstances of health or financial hardship, and review any relief available to such members, on a case by case basis”.��

“After listening to feedback from our members and their concerns regarding passing on the obligation and rights of the membership to family members upon death, we have changed the club constitution to remove the responsible entity’s discretion to cancel memberships upon request following the death of a member. This therefore allows the beneficiary of a membership to decide whether or not they wish to continue with the membership,” the spokesperson added.��

In other words, while current members are stuck in their schemes regardless of any hardships they may face, Accor can no longer force the children of members to keep paying for the scheme after their parents die, according to the company.

The post Timeshare boards vote no to hardship relief�� appeared first on ����Vlog.

In this latest instalment of our ongoing investigation into the timeshare industry, we analyse feedback from 351 timeshare members.��

Many say they’re getting a raw deal from timeshare operators including Accor Vacation Club, Classic Holidays, Club Wyndham, Holiday Concepts and Ultiqa.��

Survey reveals almost a third want out

Of the 351 timeshare members we surveyed, almost 30% say they’d like to leave their schemes but can’t, and another 12.5% say they’re thinking about leaving.��

A staggering 70% of these members say their schemes pass on to their children, who will be burdened with the yearly fees. (Another 15% said they weren’t sure if this would happen.)��

One Classic Holidays member who’s in this bind, Colin, says, “Frankly I would give my share away to have this out of my life.” Another, Phil, says, “the levies are more expensive than the holiday itself”.��

Classic Holidays member Leanne, also stuck in her scheme, says “the ongoing fees outweigh the benefits”.

But Classic Holidays isn’t the only operator with members who want out.��

Megan: ‘One of our biggest regrets’

“Signing up for this has become one of our biggest regrets and has contributed to financial and emotional distress,” says Megan, a member of Accor Vacation Club.��

“On sign-up it was apparent to them that we couldn’t afford it at the time. We needed a special exemption to get the deposit together.

“It’s expensive and such a waste of money, but we haven’t been able to find our way out. They said if we didn’t want it any more we could sell it, which is technically true, but unrealistic. No one buys memberships at our level, and even higher-level memberships are sold for peanuts.”��

Jason: ‘Aggressive sales tactics’

Jason*, a Club Wyndham member, says he felt “misled by sales staff”.�� “They promised many benefits with aggressive sales tactics to lure the people to purchase credits and gave little or no time to think about their product. I think Wyndham has misled innocent people.” (*Not his real name.)��

Robert, who’s a member of Intervale International, would get out if he could, and calls his timeshare scheme “basically a con”.��

Barb: ‘It is not value for money’

Ultiqa member Barb, who’s also stuck in her scheme and looking for a way out, says, “The accommodation is usually unavailable when required, and mostly in areas that have nothing to offer. It is certainly not value for money. The sales tactics were pushy.”��

These are just a few of the hundreds of stories we’ve heard in 2021 from disaffected timeshare members.��

And there’s an even darker side to the timeshare industry: elderly and vulnerable members of Classic Holidays, who are facing serious health problems and life crises, are sold into new schemes as a condition for being let out of their existing ones.

Hard-sell practices of timeshare salespeople

����Vlog first started looking into��the murky world of holiday timeshares in 2016. We focused on the hard-sell practices that prop up the industry, the elusive value of timeshare points, and members getting stuck in a contract with no way out.��

In one marketing tactic, unsuspecting consumers are handed ‘scratchie’ cards in busy public places, including theme parks and shopping malls, that instantly win them a free holiday. Other giveaways are also on offer.��

But it’s all a ruse to get you to attend a holiday timeshare seminar, where skilled salespeople try to get you to buy into a scheme.��

Upfront fees and short ‘cooling-off’ periods

Falling for the timeshare hype at the seminar will see you handing over an upfront fee ranging from $14,990 to $29,250 depending on the scheme provider. Then come the annual fees, which average about $800 and tend to go up substantially every year. (As of December 2019, annual timeshare fees had gone up 4.3% on average every year over the previous five years.)��

If the salesperson persuades you to sign up on the spot, you have a mere seven days to change your mind (the ‘cooling-off’ period) if the scheme is a member of the Australian Timeshare and Holiday Ownership Council (ATHOC), and 14 days if it’s not. (Most major scheme operators are ATHOC members.)��

It doesn’t help that timeshare salespeople are exempt from the ban on conflicted remuneration that applies across the financial services industry. (The ban basically means advisers can’t recommend financial products that pay a commission but aren’t the best choice for the client.)��

Many of the roughly 184,500 timeshare members in Australia say they regret having fallen prey to their inflated promises of golden holiday deals.��

Timeshare schemes offer poor value��

At ����Vlog, we’ve attended timeshare seminars and done the maths to demonstrate that timeshare schemes don’t deliver good value for money. You’d do a lot better financially by booking a holiday directly through the property or a third-party booking service.

Worse, our investigations have found that these schemes can lock you into contracts that run from 60 to 99 years, and can cost you as much as $450,000 over the long run.��

In 2018, we handed Marriott Vacation Club a ����Vlog Shonky Award for running a 40-year timeshare scheme that was more than nine times (938%) more expensive over the first five years than similar accommodation booked online would have been ($154,823 versus $14,907, respectively).

ASIC taking notice – but too late for some��

The Australian Securities and Investments Commission (ASIC), which regulates timeshares as managed investment schemes, has been taking a greater interest in the industry in recent years.��

ASIC has tightened the regulations on timeshare operators, imposing anti-hawking rules that restrict some of the pressure sales tactics that have lured so many in, and requiring better product disclosure, longer cooling-off periods, and financial-hardship relief.�� ��

Disproportionally high complaints

ASIC also released a comprehensive report in 2019 saying “there was a high level of discontent” among timeshare members.��

In 2018–19, ASIC received 19 reports of misconduct by timeshare operators, amounting to roughly 20% of all reports the regulator received about registered managed investment schemes over that period – even though timeshares make up just 0.43% of all registered schemes.��

The Australian Financial Complaints Authority (AFCA) has also received a disproportionately high number of complaints in recent years.

Too little too late?

ASIC has taken an interest, but the regulatory fixes that have gone through in recent years are of little help to people already signed up to a scheme and who want out – especially members of so-called legacy timeshare schemes, which can keep members and their children locked in for up to 99 years with no exit option. About 60,885 timeshare members are potentially trapped in these types of legacy schemes.��

In 2019, we profiled the distressing��case of John and Linda Booth, who found out they weren’t allowed to leave their Classic Holidays-managed timeshare scheme and, when they tried to, discovered that it goes into their estate (meaning their children will inherit it). The Booth’s scheme runs until 2076. The pair were in their 70s at the time.��

In 2020, we followed up with the equally disturbing case of Coral Matcham and her daughter Cass. Coral’s Classic Holidays-managed scheme comes with the same liabilities and runs until 2084. She was 66 years old when we published the story.

Can’t you just walk away?��

We talked to legal experts about the defensibility of timeshare contracts with no exit option that purportedly pass into a member’s estate and on to their children. After all, the members don’t actually own the property. Is it really legal for a business to force you to keep paying for its services when you want out?��

Shaky legal ground

Professor Jeannie Paterson of the University of Melbourne Law School, whose own parents are caught in a Classic Holidays scheme, says the timeshare operator’s threat that the obligation to keep paying for the timeshare will pass to their children may be on shaky ground. (Paterson specialises in contracts and consumer protection.)

Classic Holidays tried one of its standard tactics on Paterson’s parents. The company pressured them to sign up to its Aspire scheme and pay a hefty upfront fee as a condition for leaving their long-term scheme, ostensibly to avoid burdening their children with years of ongoing fees.��

But the professor is sceptical about the basis of such tactics. “Children are not automatically or necessarily liable for their parents’ debts,” Paterson says. “A debt doesn’t transfer to children on the death of a parent. The executor is responsible for the debts of the estate.��

“On the death of a timeshare member, what Classic Holidays has is a claim against the estate for the payment of the debt owing under the timeshare scheme. Whether that debt is paid or not depends on the assets in the estate and where Classic Holidays sits in the order of priority for the payment of debts.”������

The right to pay out of the contract?

And when a timeshare contract doesn’t mention or is unclear about a member not being able to leave – as has been the case in a number of our previous investigations – the member has the right to offer to pay out any remaining contractual obligations.����

“Because the payment is being made now, instead of over many years, this payout amount is unlikely to amount to the full cost of the fees payable to the timeshare operator for the remaining term of the timeshare,” Paterson says.��

Paterson says refusing to let members leave their schemes by paying out any debts is unfair and an overreach.��

Along with professor Paterson, the Law Council of Australia also expressed concerns about the timeshare industry.��

“Timeshare contracts are complex, long, and commonly misunderstood,” says president Dr Jacoba Brasch QC.

“The Law Council of Australia has heard anecdotal reports that some consumers have reported ongoing problems and dissatisfaction with timeshare contracts. We support calls for the timeshare industry to undergo a rigorous review.”

Classic Holidays’ Aspire scheme: A dubious ‘way out’

Half of the 54 Classic Holidays members who took our survey would like to leave their schemes but can’t, and another eight said they were thinking about leaving. Twenty-seven members said Classic Holidays had tried to sell them into its Aspire scheme, but they all said no.��

One member, Adrian, told us: “Aspire wanted $29,000 to join up and get out of a Classic Holidays timeshare. I have had a stroke and therefore have no income. Pure greed.”��

Another, Brian, turned down the Aspire offer too, but says, “We would welcome a way out of the whole deal.”��

In 2019, we filed a formal complaint with ASIC about an 87-year-old woman who was pressured into taking up the Aspire offer and agreed to join a six-year point-based scheme at a minimum cost of $12,500.��

Classic Holidays made the threat that her long-term scheme, which was due to expire in 2084, would pass on to her daughter. Among other things, we alleged in our complaint that Classic Holidays deceptively characterised the $12,500 deal as a hardship-relief offer in accordance with ASIC regulations, which it wasn’t.��

We’ve also seen other substantial documentation of Classic Holidays refusing to let financially strapped elderly members suffering serious health problems out of their schemes and, in many cases, pushing the Aspire option instead. In many cases, these members are unable to travel, but continue to be billed their yearly fees.��

Other timeshare schemes no better

Many members of other timeshare schemes such as Accor, Ultiqa and Wyndham are also looking to leave. Of the 356 members we heard from, 145 would either like to get out but can’t, or are thinking of trying to get out.��

Of the 59 Accor members we surveyed, 26 would either like to get out but can’t, or are thinking of trying to get out. In the case of Ultiqa, this holds true for 16 of the 25 members we heard from.

Accor and Wyndham told us they don’t take over management of title-based legacy schemes, as Classic Holidays does. Ultiqa declined to respond to our query.

ATHOC: ‘We actively support consumer protection’

Despite the negative views expressed by so many respondents to our survey, an ATHOC spokesperson told us its own survey shows that “over 65% of timeshare members are satisfied or very satisfied with their membership”, and that timeshare schemes are “an important economic stimulus for the local community”.

The spokesperson characterised the 351 respondents to our survey as a “tiny sample size [that] does not accurately reflect reality”.

Yet our in-house survey experts dispute this assertion, saying 351 timeshare members is a robust sample size for the purposes of our investigation and does suggest systemic issues.

Why no exit option?

When asked why timeshare contracts generally don’t include an exit option, and whether demanding that consumers accept and keep paying for a service they no longer want is the aberration it appears to be, the spokesperson said “state-based title laws and regulations do not allow for these owners to exit or walk away from their titled ownership without the title being transferred to another party.��

“This is no different to how other real property, such as a home, is treated. Home owners can’t just decide one day they don’t want to pay rates and taxes, for example.”��

But Professor Paterson disputes this explanation, saying many timeshare members “don’t own specific property in the way they might own a house or land”. Instead, she argues, members typically hold a ”share of the net assets held by the timeshare scheme and managed by the operator”.��

Under current law, “a timeshare operator may hold the timeshare assets of a managed investment scheme on trust for the timeshare members,” Paterson says, adding that such an arrangement “carries certain obligations, including acting honestly, with reasonable care and diligence and in the best interests of members”.

Potentially misleading conduct

According to Paterson, telling members they own title to property, can never be released from the ongoing fees, and that their children will be burdened with the ongoing liability “may in some circumstances be contrary to the prohibition on misleading conduct in trade or commerce under the ASIC Act”.��

Big upfront fees

Similarly, she says, trying to pressure older members into paying a significant upfront fee to move from a title-based scheme to a points-based scheme (such as the Aspire program) by giving inaccurate information and playing on parental concerns about burdening their children “is close to the advantage-taking behaviour that, in the right circumstances, will be unconscionable under the ASIC Act”.

Paterson adds: “Timeshare members trying to make important decisions about their timeshares need clear, accurate information so that they can properly price the options available to them.

“They are not decisions that should be made on the basis of uncertainty, anxiety or even despair.”��

Meanwhile, ATHOC says it “actively supports consumer protection and works diligently to support our timeshare owners”.

Reiterating a point that Classic Holidays made in an earlier ����Vlog investigation, ATHOC also says it “invites ����Vlog to help it petition the regulators for changes that would allow further options for consumers in legacy schemes to exit their timeshare”.

Classic Holidays stands by its claims

Classic Holidays CEO Ramy Filo tells us that the timeshare operator, which manages a number of legacy schemes, “strongly refutes any allegation or insinuation of unconscionable conduct” and reiterated the company’s position that members can’t leave schemes, but only sell or give them away.��

Filo also stresses that Classic Holidays only manages the legacy schemes, wasn’t involved in setting them up, and acts on behalf of the boards of the individual properties where the schemes were started. (However, legacy scheme members who have contacted the properties about leaving have been directed back to Classic Holidays.)��

CEO defends Aspire program

Filo says the option to pay a sizeable lump sum and join a shorter points-based scheme through the Aspire or other program is open to some members for whom the legacy scheme is “no longer suitable for their holiday needs and objectives”. He adds that Classic Holidays doesn’t offer Aspire to members in hardship circumstances.��

As Filo points out, hardship-relief provisions don’t apply to legacy schemes in any case. And where they do apply, he says, “responsible entities have until 1 October 2021 to determine whether or not it is in the best interests of members to implement hardship withdrawal provisions”.��

Good business for Classic Holidays?

Nevertheless, having legacy members take the Aspire option appears to represent a windfall for Classic Holidays.��

On top of the lump sum that legacy-scheme members must pay – and the commitment to a points-based scheme with yearly fees – Classic Holidays also receives the week or weeks from the legacy scheme, which it can then sell to its members.

When moving a legacy scheme member to a points-based scheme, Classic Holidays “complies with its obligations under the Corporations Act [ASIC’s governing document]”, Filo says.��

Filo adds that 28% of Classic Holidays points-based members are former legacy-scheme members who took the Aspire or similar option – and he denies that people are pressured into taking up these offers.��

He also confirmed that, in Classic Holidays’ view, a scheme becomes part of a member’s estate when they die and the obligation to pay yearly fees continues. How this holds up legally in cases where nobody can find any documentation that spells this out remains unclear.

Correction: An earlier version of this article said the cooling off period for timeshare sales is 14 days for members of ATHOC and 21 days for non-members. The correct figures are seven days for ATHOC members and 14 days for non-members.��

The post Timeshare survey: ‘We want to get out but can’t’ say 30% appeared first on ����Vlog.

Coral Matcham really can’t afford to keep paying for the timeshare arrangement she and her late husband Wayne took up at Tasmania’s Shearwater Country Club and Resort in 1996.

She’s 66 years old, won’t be staying there again, and hasn’t in many years.��

But she paid her recent annual bill because the timeshare manager that took over management of the scheme in 2015, Queensland-based Classic Holidays, threatened to send debt collectors after her.��

“I was thinking, I don’t want to pay it, I don’t want to pay, but I’ll have to because I don’t want to go to debt collection,” Coral told ����Vlog in a recent interview.��

“So I’ve paid the $912. I ended up paying it because the last thing I want is having debt collectors contacting me.”

Fees up 495% in 28 years

In 1992, the annual fee was $153.33, meaning it’s gone up almost 495% over 28 years, which is well above the inflation rate. Even if the annual fee remained the same – which it wouldn’t because of inflation – Coral, and then her daughter Cass, would be looking at $58,368 in fees over the remaining life of the scheme. The real figure, of course, could be much higher.

Coral and Cass – who’s trying to get her mum out of the scheme – are convinced that Coral has no legal obligation to pay any Classic Holidays bill or stay with the timeshare scheme at all, but Classic Holidays is pushing back hard.��

According to the latest communication from Classic Holidays, Coral is committed to the 64 years remaining on the scheme, with no way out except to sell it.��

Selling would be a very tall order given the lack of buyers for these types of timeshare deals, which can last up to 99 years with no exit option.��

Unreliable information from Classic Holidays��

Classic Holidays has been inconsistent on the point of how many years remain on Coral’s scheme.��

According to Cass, in July 2019 a Classic Holidays rep told the Matchams there were 67 years left on the scheme.��In July 2020, a Classic Holidays rep told Coral there were 64 years left, but told her daughter Cass there were “around 60”.

Coral and Wayne, who were both busy with their jobs over the decades, never found much value in the scheme to begin with.��

“We actually found we couldn’t do a lot with it because we were limited to having to take a full week,” Coral says. “We couldn’t take a day here or a day there. And if we did just take, for example, three days, we forfeited the rest of that week.”��

In our previous Classic Holidays profile of John and Linda Booth, Classic Holidays is on record as saying the scheme becomes part of their estate and passes on to their children – whether they like or not.��

Like the Booth’s children, Cass Matcham wants no part of it.��

“What am I going to do with this program? I want out,” Coral says. “I don’t want it, it doesn’t suit me, I just don’t want it. But trying to talk to Classic Holidays about it is like banging your head against a brick wall. They just don’t want to know.”

One of many aggrieved customers��

Coral is hardly the only timeshare member who’s not happy with being in a timeshare scheme.��

According to a major ASIC report on the sector that came out in December 2019, “there was a high level of discontent overall. Many consumers felt that they were not getting the expected value from their membership and that they had experienced financial stress because of unexpected changes to membership fees, or in some cases, to their personal circumstances”.

In the middle of this investigation, another Classic Holidays member, Margaret Rolla, got in touch with ����Vlog with a story similar to the Matchams.��

Margaret took up a Classic Holidays timeshare scheme in 2008, but by 2013 the family finances could no longer handle the annual payments.��

“When I asked about cancelling the membership and if we’d be reimbursed any money from the $20,000 outlay, I was told I would have to give my membership away to someone else or try and sell it privately,” Margaret told ����Vlog.��

Then, a Classic Holidays ownership advisor called and told Margaret “some things that were never told to us nor is it in the contract PDS,” says Margaret.��

Among them was the lack of an exit option and that the membership becomes part of Margaret and her husband’s estate when they die. In other words, as Margaret put it, “Our children and great grandchildren will be lumbered with this!”

Coral, Cass, Margaret and many other aggrieved timeshare members who have contacted ����Vlog in recent years are caught up in what is known as a ‘title-based timeshare scheme’, in which members have access to a specific property for a given period of time each year.��

The other type of timeshare is a ‘points-based scheme’, a convoluted system in which members buy points and redeem them for holidays at specific resorts or holiday accommodations.��

����Vlog has��demonstrated��that timeshare schemes in general do not offer good value for money.

No contract to be found��

What Coral and Cass have been trying to tell Classic Holidays since July 2019 is that, like Margaret, they’ve never had a contract or PDS that says anything about 64 years remaining on the scheme (or 85 in Margaret’s case) or not being able to leave it.��

Crucially, both Classic Holidays and Shearwater resort said they had no such documents either when Cass started trying to track them down in July 2019.��

Classic Holidays said Shearwater has them. Shearwater said Classic Holidays has them.��

“When I contacted Shearwater, they seemed very confused about why I’d contacted them,” Cass says. “They said they’d handed all documentation and responsibility for that over to Classic Holidays as part of the management agreement.”

Coral told Classic Holidays that she’d like to see the records so she could consider her options.��

“Basically, their response was, ‘We don’t have anything like that. We don’t have a contract. You should have it’. But we were never given a contract.”��

“That’s what I was so incredulous about,” Cass told ����Vlog. “They’re still sending Mum bills. I know from past bills and past activities and from reading forums that they’re very apt to charge people overdue fees if they don’t pay and send the bills to debt collectors. But they can’t tell me why I’m paying something. I don’t understand how they can continue charging us for something we don’t actually have an agreement for. It seems crazy.”��

Classic Holidays initially told Coral they are only required to keep such documents for seven years. The implication seemed to be that they once had the documents, but didn’t have them any longer, and that Coral should have her own copies in any case.����

But Coral, who’s a career professional documents manager, says she’s not one to lose track of paperwork.��

“I know what it’s like to have to keep records for legislative reasons and for legal reasons and all other sorts of reasons,” she says. “If I had that paperwork, trust me, I’d still have it. You have to keep a contract for at least seven years after the expiry or termination. If it’s active you can’t get rid of it.”��

When Classic Holidays threatened to unleash the debt collectors on the grounds of breach of contract if she didn’t pay her recent bill, Coral had a pointed question for the company: “What contract? What am I breaching?”��

“When I talked about possibly getting a lawyer involved, they basically said, ‘Well, good luck, they’re not going to get anywhere either’,” Cass says.��

No title on file��

At one point during the months of back and forth, a Classic Holidays salesman told Coral and Cass that the ‘title’ to the timeshare was on file at the Tasmania titles office.��

Coral was floored by this assertion: “I said, ‘What? Now that cannot possibly be right. Are you telling me I have a legal title lodged in my name at the titles office in Tasmania?'”

The Tasmania titles office told Coral there was no certificate of title under her name in the area of Shearwater resort and that, in any event, the document and certificate number that the Classic Holidays’ rep had given her wasn’t in the right format.��

“The land titles office does not issue the certificate in your attachment. I suggest you seek legal advice from a solicitor in relation to this matter,” the office wrote back.��

Flimsy documentation at best��

What Classic Holidays did send Coral and Cass Matcham in June 2020 was a copy of the timeshare application, a copy of the unit certificate (both of which they already had) and financial statements showing Coral’s annual payments.

None of the documents say anything about the length of the timeshare arrangement or the impossibility of leaving it.��

“The documents we received have multiple dates on them and we haven’t been able to get clarification of what the dates mean and why they’re different,” Cass says. “It’s kind of gone around in circles.”

Classic Holidays CEO, Ramy Filo, is also the president of the Australian Timeshare and Holiday Ownership Council (ATHOC), an industry body representing the interests of timeshare operators including Classic Holidays, Ultiqua, Accor Vacation Club, Marriott Vacation Club, Wyndham Destinations and others.��

The ATHOC code of practice says members “must establish and maintain proper administrative records and books of account, including written financial records which correctly record and explain its transactions”.��

It also says ATHOC members must provide “the current PDS, or if there is no current PDS, the last PDS issued with respect to the scheme”.

Documents emerge at last

After ����Vlog contacted Filo in early August this year, he said it had come to Classic Holidays’ attention that Wayne and Coral Matcham had entered the Shearwater timeshare arrangement as a “private resale”.

At that point, Classic Holidays sent through Shearwater “house rules” and “memorandum and articles of association” documents to Coral and Cass.��

The reason such disclosure documents weren’t initially given to Coral, said��Filo, is because “secondary sales are private transactions and did not to our knowledge have these requirements”.��

But Coral says she bought her week at Shearwater directly from the resort, not from an existing member. It was not a private sale.��

And neither of these newly provided documents say anything about the duration of the deal or the lack of an exit option.��

After ����Vlog interviewed Ramy Filo and Classic Holidays’ chief operating officer Carole Smith in early August, other documents emerged and were sent to Coral and Cass.��

Neither the ‘prospectus’ nor the ‘trust deed’ they received say Coral is locked into the timeshare deal for the next 64 years, or that she can’t simply quit the scheme.��

We ran the documentation by a legal expert, who had a number of serious concerns about the scheme’s structure.��

Principal lawyer Andrew Simpson at Maurice Blackburn also found a number of issues with the primary legal documents, the unit trust and prospectus, especially on the points of the alleged 80-year duration of the scheme and the inability to simply walk away from it.��

“It’s pretty unclear on those��points,” Simpson said. “The offer is an offer in perpetuity, but there’s nothing in the prospectus that discusses any right to exit. There is nothing in the document that lends any detail to that question.”��

And if Coral didn’t see these documents until 24 years after taking up the timeshare, their legitimacy��is further undermined.

“I would have thought��you would have been given a copy of the deed up front. If you’re going to sign up to something, you’d like to know what the terms are,” Simpson said.��

For the average vacationer looking to sign up to a scheme that gives them a week in a holiday resort every year, a unit trust��is a complex structure.��It’s the kind of legal setup normally used in business or commercial arrangements, Simpson says, and comes with��many provisions and restrictions��that a holiday-goer wouldn’t be in a position to understand.����

Even if Coral had seen the documents from the outset, it probably wouldn’t have helped, Simpson said.��

“Most people who would read these documents would have no idea what they were signing up to. These are complicated documents. The limiting nature of the transfer provisions means that future generations will also be stuck with the on-going liability of the timeshare interest, whether they want it or not.”

The case for hardship relief

When Cass first got in touch with Classic Holidays she made the case that her mum should qualify for hardship relief on the grounds that she is over the pension age and has been affected by the COVID-19 crisis.��

Having a hardship relief program on offer is a proposed��requirement��under rules governed by the Australian Securities and Investments Commission (ASIC), which regulates the timeshare industry as a managed investment scheme.��

But Filo says the requirement wouldn’t apply to ‘legacy titles’ like Coral’s anyway.��

When we asked ASIC about this, the regulator confirmed that its proposal to introduce hardship relief as part of the update of regulatory guide 160 (which covers timeshare schemes) was still on track.��

ASIC “is proceeding with proposals to introduce hardship relief as part of the revision of regulatory guide 160,” a spokesperson said.��

But whether it will apply to legacy titles remains unclear.��

“The application of this relief is not automatic, particularly in the case of legacy schemes, because each legacy scheme operates under an individual instrument of relief [exemption from regulations] which will need to be amended on a case by case basis in consultation with the individual operator,” the ASIC spokesperson said, adding, “It is ASIC’s intention to engage with the operators of legacy schemes about the proposed amendment of their instruments after the release of the revised regulatory guide 160.”

At the bottom of Coral’s most recent bill, a note says: “Interest accrues to overdue accounts including those on payment plans. Based on individual extenuating circumstances relative to COVID-19 exemptions may apply. Please contact the resort to discuss.”

Yet there was no hardship relief on offer for Coral and Cass.��

“When I asked about financial hardship they responded that ‘regrettably the resort does not operate a resale or relinquishment service and they are unable to take back your entitlement’,” Cass says.��

“They didn’t ask for any detail. They didn’t say, ‘Okay what sort of hardship are you experiencing and do you think it will be ongoing?’ They explicitly and repeatedly said they don’t have any hardship options.”

Cass was told she could make her case to the Shearwater board of directors.��

When Cass followed up on the hardship question in a phone call, Classic Holidays said the only option was to move Coral to its Aspire program.��After she paid the upfront cost of $7990, Classic Holidays said it would reimburse half the annual fees every year.

The total cost to Coral would still have been more than $10,000.��

In a last-ditch effort, Cass asked Classic holidays ‘how about if I give you $5000 right now and we can call it a day?’

“I said I just want out right now and I’ll transfer you the money as we’re sitting here,” Cass says. “It was a firm no, and the more I pushed on it, the more dismissive and somewhat aggressive they got.

“The alternative, they suggested to me, is that I just take it over now.”��

Filo told ����Vlog, “We have provided assistance in many areas to address timeshare ownership annual fees as a result of COVID-19,” and that Classic Holidays has “introduced various assistance measures including deferred payment plans, extended entitlement periods, refunds for part of levies when resorts were closed, and reservation cancellations without penalties”.��

But being let out of a scheme altogether is not one of the hardship options on the table, Filo confirmed.��

The Aspire hard sell��

Classic Holidays’ Aspire program lets members move from a title-based to a point-based scheme if they agree to pay a significant upfront fee and then annual fees for a set number of years.��

In Coral’s case, the offer started at $21,950 in July 2019, but Classic Holidays said it would drop that to $16,150 plus a 10-year membership in its points-based program for $889 a year.

In May 2020, Classic made another Aspire offer of $12,490, but discounted to $7990 if Coral traded in the four weeks owed to her, as well as paid $690 a year for six years.��

“I’m thinking this six-year deal, it’s got to be better than 64,” Coral says. “So they hooked me a little bit with that. Then I started thinking, I don’t want that either. I don’t get the benefit out of it now. I just want to walk away.”

When Cass was going back and forth with Classic, Classic was emailing Coral, suggesting she should take the $7790 offer before it was withdrawn. ��

“I said to them it will take a few days to think about and when I called them back the next week they did that whole sales tactic on me, saying ‘It’s already gone up, but let me see what we can do’,” Cass says.��

Filo describes the Aspire option as a benevolent program designed to help members get out of long-term legacy schemes. He says the company has shifted about 300 members onto it in the past 12 months “on a triage basis”.

For vulnerable members, Filo says, Classic Holidays waves the upfront fee.��

The other option on the table for Coral and Cass was to list their timeshare on the Timeshare Brokers website for three months for $19.95 a month, though the first month is free.��

If it doesn’t sell in that time, Classic Holidays says Coral can then write a letter to the Shearwater board of directors, but it would need to be sent through resolutions@classicholidays.com.au.��

It’s worth noting that Timeshare Brokers is part of Classic Holidays. Filo says the company collects only the monthly listing fee, not any commissions on sales.��

Classic Holidays: We didn’t make the scheme, we just manage it

As has been the case with previous Classic Holidays investigations, the timeshare operator stressed that it had nothing to do with setting up the scheme – it only manages it.��

And it says it doesn’t have the authority to allow people to exit schemes.��

Although all billing and correspondence for Coral’s Shearwater deal goes through Classic Holidays – and it’s Classic Holidays that has repeatedly told Coral she can’t exit the scheme – CEO Ramy Filo was quick to point out that Coral “is not a Classic Holidays member”.��

“Just to clarify, what Coral owns is an 80-year trust that was established in 1987,” Classic Holidays’ chief operating officer Carole Smith told ����Vlog in a joint interview with Filo.��

“The other issue is that this resort [Shearwater] was very light on documentation and owners’ information, and that’s what we inherited,” Smith says. “So we’ve got what we’ve got. We made that assumption because the actual trust was set up in 1987. It was 30 years ago. We inherited this five years ago.”��

As for the inaccurate information given by the Classic Holidays salesman, Filo says Coral and Cass were asking the wrong person. “She was talking to the sales guy who doesn’t understand the structure,” Filo says. “It was just a mistake.”��

Classic Holidays: ‘You should have known about it’��

Filo made the point that the structure of the scheme – its duration and lack of exit option – would have been a subject of discussion at Shearwater’s annual general meeting (AGM), questioning the Matchams’ claim that these details were unknown to them.��

“They could have attended it anytime,” Filo says. “We get a lot of turnout at the AGM of members. They can ask the directors questions. They talk to other members at every function. So I find it a bit hard to say nobody knew what they were into. They all talk and they all understand, and they love their resorts. I find it a bit wrong for somebody to say, today, ‘We didn’t know what we bought’.”

Yet going to the Shearwater AGM wasn’t a viable option for the Matchams, not least because it was a six-hour drive there and back.

“In addition,” she says, “Wayne ran his own small business, so getting any time away was always extremely problematic. I was working full time, and I had two young children who couldn’t just be pulled out of school just so we could attend an AGM.”��

Asked whether the latest documents sent to Coral and Cass clearly state that the scheme lasts 80 years, Smith said: “Yes. It’s just that it’s superseded by the articles of association as such, because it was amalgamated and it’s managed as the one entity, but I do have the original unit trust.”��

While it is dated 1987, the unit trust document says nothing about the scheme lasting 80 years.��

Asked why Classic Holidays has the authority to move members into its Aspire program but not the authority to let them leave the scheme altogether, Filo said, “What she’s [Coral] doing is trading in her week to give her extra points. And the club, the new trust, owns the week at Shearwater. So the trust, designed by all members including her, now has a variable time, six years, 10 years and so on.”��

Asked why the Aspire offer to Coral had come down so much since the initial July 2019 offer, Filo said, “I don’t know what was discussed a year ago. It’s changed. Everything changes.”��

Coral says the assertion that she and her late husband were, or should have been, aware of the length of the scheme and the number of years left on it all along is demonstrably untrue.��

“The 60-ish numbers weren’t ones we came up with,” Coral says, referring to the varying number of years different people at Classic said were left on the scheme before settling on 64.��

“Neither was 80,” Coral continued. “In fact, the 80 number only came up very recently after Cass started pushing for details. These numbers are ones that have now been thrown at us by Classic. Our position that this came as a surprise to us is completely true. And suggesting that we should have known those figures is ridiculous. We have had no documentation that supports that in any way, shape or form.”��

Filo says the reason timeshares are so difficult to sell is because of the many timeshare exit scams, especially in the US.��

“The problem is the scams that have happened in America, and then that went through Europe,” Filo says. “They prey on people.”��

Filo says he agrees with ����Vlog that the long-term schemes are an unfortunate arrangement for many members, and he says they’re mostly a thing of the past.��

“I want to lobby ASIC,” Filo says. “It’s been three years in the making and I’m still waiting for regulatory guide 160 to come out.

“But even if the guide comes out tomorrow, Shearwater doesn’t fall under it. It can’t. It’s title-based. Somebody has to own the title. You can’t just forfeit an interest.”

Where are the regulators?��

Cass complained first to the Australian Financial Complaints Authority (AFCA) and then to ASIC about her and her mum’s predicament with Classic Holidays.��

AFCA said it can’t help because Classic Holidays isn’t a member of AFCA, and ASIC said it doesn’t take individual complaints and directed them to AFCA.��

In an earlier investigation, however, ����Vlog established that the responsible corporate entity for Classic Holidays is Classic Clubs, which is a member of AFCA.��

When we brought that to AFCA’s attention in the earlier investigation, the agency said, “We have not been able to establish a legal relationship between Classic Clubs Limited and Classic Leisure that would allow us to consider complaints about products or services provided by Classic Leisure, given that we can only review cases involving our members.”��

AFCA also told us it “cannot consider a complaint against Cedar Lake Country Resort Limited (the subject of the earlier investigation) as it is not an AFCA member. Cedar Lake is not a member-run timesharing scheme, and was granted an ASIC exemption in 2001. This means it does not require a responsible entity, and is not required to be an AFCA member. Classic Leisure Pty Ltd has a management agreement for Cedar Lake”.

Filo says Shearwater was granted a similar exemption, which is consistent with ASIC’s response earlier about hardship relief.��

AFCA’s response to our latest round of questions underlines how complicated these legacy timeshare setups can be, often leaving members in a regulatory void.��

An AFCA spokesperson told us it wasn’t authorised to comment on a specific complaint. But he did confirm that Shearwater was a member of AFCA’s predecessor, the Financial Ombudsman Service, but terminated its membership in May 2016.��

Following up on our earlier inquiry, AFCA said it does sometimes look at the legal relationships between related companies as part of its investigative approach, but only on a case-by-case basis.��

Whether or not Classic Clubs is legally responsible for the conduct of Classic Holidays as the manager of the Shearwater timeshare business in accordance with its ASIC licensing or corporate status is a question for ASIC, the AFCA spokesperson said.

‘There’s no way on God’s green earth I can afford this’��

While Coral and Cass still aren’t sure what any of Classic Holidays’ explanations about “title-based ownership” actually mean, they are sure they’d like to part ways with Shearwater and Classic Holidays.��

“I am 66 years old,” says Coral. “I will eventually be going on to a pension. I don’t have superannuation. I lost my husband a couple of years ago and he’d been very, very ill with cancer, so whatever superannuation we had in those years leading up to that, we still had the mortgage, we had debt, we had living costs, we had hospital costs, so our super went. So when I stop working, or if I don’t get any more work, then I’m on an old-age pension, and there’s no way on God’s green earth I can afford this on a pension.”��

Cass is of the same mind. “Knowing how they’ve treated me and Mum during the course of this, you want to see it ended for good really,” she says.

The post Timeshare scheme with no contract and no way out appeared first on ����Vlog.

John and Linda Booth – both 69 and living off their super – have two main household expenses these days.��

The first is private health insurance; the second is a holiday timeshare scheme managed by one of Australia’s biggest timeshare operators, Classic Holidays.��

They could get out of the health insurance if they wanted to, although that mightn’t be a good idea at their age. But they recently discovered that they – and their children – are stuck with the timeshare for a very long time. At least that’s what Classic Holidays told them earlier this year.��

“There’s no end to the scheme as far as I understand it,” John tells ����Vlog. “And when we die, it immediately transfers to the executors of our estate.”��

John and Linda’s three children want no part of it.��

(We’ve established that the Booth family is stuck in the timeshare until 2076, but we’ll get to that below.)

The timeshare currently costs the Booths about $2,200 a year, and John estimates the costs have been going up about nine percent every year.��

They bought the timeshare in a single property, Queensland’s Cedar Lake Country Resort, in August 2006. The Booths didn’t sign a contract at the time, but they did fill out an application form and were supposed to have received by-laws and constitution documents that laid out the terms and conditions.����

In 2010 Classic Holidays entered a management agreement with Cedar Lake.

No way out

When the Booths contacted Classic Holidays in January 2019 and said they wanted to get out of the scheme, they were taken aback by the response:��

“We wish to advise that Classic Holidays and the Resort do not provide a relinquishment option should a member or their family no longer wish to retain their ownership”.

It was the first the Booths had heard of not being able to exit the timeshare scheme they’d entered 13 years earlier, entitling them to three weeks a year in a two-bedroom apartment. They had bought the timeshare from a previous owner.��

Classic Holidays referred them to the Cedar Lake by-laws and constitutions document, the first time they’d seen either as far as the Booths were concerned.

We’ve reviewed both documents. The by-laws are relatively clear about things like who gets to use the pool and booking time frames, but say nothing about not being able to leave the scheme.��

The constitution is 35 pages of dense legalese. Section 7.6 paragraph 1 says “a member shall not be entitled to resign or retire from membership of the Club while he remains registered”.��

As for the length of their timeshare arrangement, the Cedar Lake constitution says the objective of the “company” is to lease a parcel of land for 99 years from Coastal Mountain Corporation starting in March 1977. It doesn’t specifically say anything about the length of the Booth’s timeshare deal.����

“We don’t believe we were ever supplied these documents, when we first signed up for the scheme or at any point after until we asked to get out of the scheme,” John says.����

“We were aware that we would have to pay a maintenance fee but knew nothing about not being able to get out of the timeshare once we were in.”

“At no stage of the purchase did we get advised by the seller or did the solicitor highlight the details we now know from various people,” John says. “The only document we had in our files from the beginning was the title showing the previous and current owners. I have not seen anything that says you can’t get out of the scheme.”����

Unmoved by this argument, Classic Holidays told the Booths they might be able to qualify for a hardship waiver, but warns “this is quite a lengthy process and you will be required to complete forms and supply supporting documentation. The only other alternative is to gift or sell your timeshare ownership”.��

As we’ve pointed out in earlier timeshare investigations, trying to sell a timeshare ownership is a very tall order. And, given the ongoing fees and restrictive conditions, a timeshare would probably not make a welcome gift.����

A deal gone bad��

Though they recently lost their part pension after the government raised the assets threshold, John says he and his wife are not necessarily in financial hardship, he just wants to get out of the scheme because it’s bad value for money and they don’t want to burden their children with it.��

“It’s gotten to the stage where I can go to booking.com and get an accommodation for half the price I would pay through the timeshare scheme,” John says.��

He acknowledges that the scheme delivered good value for money for a number of years, and they took holidays around the world. But those days are over.��

“It’s no longer an affordable holiday, the way it was promoted in the early years,” John says. “The costs outweigh the return.”

Belated disclosure��

In May 2019, the Booths received a Classic Holidays newsletter that cautioned members not to believe third parties when they promised timeshare owners there was a way to exit their schemes.

Aside from the vague wording in the Cedar Lake constitution that Classic Holidays sent them earlier in the year, they say it’s the only documentation they’ve seen that seems to indicate, by inference in this case, that customers are locked in.����

The Booths filed a complaint with the Australian Securities and Investments Commission (ASIC), which regulates the timeshare industry as a managed investment scheme, but the regulator advised that the Booths should resolve the matter with Classic Holidays or, failing that, through the Australian Financial Complaints Authority (AFCA).����

They tried both, but AFCA sent them a response saying the agency “cannot consider a complaint against Cedar Lake Country Resort Limited as it is not an AFCA member. Cedar Lake is a member-run timesharing scheme, and was granted an ASIC exemption in 2001. This means it does not require a responsible entity, and is not required to be an AFCA member. Classic Leisure has a management agreement for Cedar Lake.”����

The Booths also filed complaints with the Commonwealth Ombudsman and the Queensland Office of Fair Trading (OFT).��

Both said the matter was not in their jurisdiction. The Ombudsman directed them to AFCA.��

As we discovered during this investigation, Cedar Lake is not an AFCA member, but Classic Holiday Club (the timeshare scheme) is.

We asked AFCA if this makes a difference and were told by senior communications adviser Matt Jones, “after investigation we have not been able to establish a legal relationship between Classic Clubs Limited and Classic Leisure that would allow us to consider complaints about products or services provided by Classic Leisure [which trades as Classic Holidays] – given that we can only review cases involving our members.”����

However, Classic Holidays, Classic Clubs Limited and Classic Leisure are all included in the Classic Holiday Club product disclosure statement. And the PDS says members should complain to AFCA if they’re not happy with the outcome of their complaint to Classic Holidays.

(By the way, if you’re confused about the relationships, or lack of them, between these various companies and schemes, you’re not alone – we had trouble unpicking them too. So it’s no wonder John and Linda Booth have struggled to make sense of where they stand, legally and financially.)

We followed up with OFT, which said it couldn’t intervene in the Booth case because the couple signed on to the scheme in 2006.��

“This is prior to the commencement of the Australian Consumer Law and the introduction of unfair contract terms it brought,” a spokesperson told us.

“Additionally, under the ACL, and under the legislation in force prior to the ACL’s commencement, there is a three-year time limit on proceedings under the Act. Accordingly in cases such as those you have outlined, the OFT would recommend the consumer seek legal advice as to the options and avenues available.”��

When we followed up with ASIC, the regulator told us “we suggest that Mr and Mrs Booth seek their own legal advice about their situation”.

Classic Holidays responds��

Classic Holidays CEO Ramy Filo takes exception to the Booth’s version of events.��

“The timeshare is not run by Classic Holidays but by the board of the Cedar Lakes Country Resort,” Filo tells us. “What we wrote to the Booths is what the board and the constitution required us to do.”��

Filo says the Booths should take their grievance to Cedar Lake, not Classic Holidays.��

But John Booth says he contacted Cedar Lake and received an email referring him to the response he had received from Classic Holidays.��

“Even when you contact Cedar Lake, Classic Holidays reply, so how can they say they have nothing to do with Cedar Lake?” John says.

When we made Classic Holidays aware of this and asked how the Booths could contact the Cedar Lake board, Classic Holidays COO Carole Smith didn’t provide contact information but said “correspondence including hardship requests are tabled at each board meeting. Members can also attend the AGM held at the Resort each May.”

Filo likens being in a timeshare scheme to owning a home.

According to Filo, the Booths “own land and title at the resort. You can’t just magically get rid of a title. They may not have understood what they bought, but they were bound by the constitution and the by-laws. They own shares in a company and title to the land.”��

As for whether they saw these documents in 2006, Filo says “when you buy privately in a secondary sale, ASIC says you don’t have to give any disclosure”.��

(We confirmed this with ASIC, which told us “there is no requirement under the Corporations Act for a PDS

Filo also makes the case the Booths and their children have a good deal going. “They’re paying $807 a week for a two-bedroom apartment, and they can swap these weeks around the world.”��

But the deal comes with many conditions, such as having to make bookings for school holidays, Easter weekend and the Christmas period at least two years in advance.

And if you cancel a booking anytime sooner than 60 days before the date, you lose your Classic Holiday points.����

The legal parameters of the Booth’s obligation to the scheme appear to be unclear.

Though Filo says the Booths “own land and title at the [Cedar Lake] resort” and that they “own a share in a company and title to the land”, Classic Holidays COO Carole Smith uses the word “lease” in the same interview and acknowledges that a 99-year lease is a long time to be committed to a property.��

“You won’t find that on the market today unless it’s a private seller,” Smith says. “That was the older style of timeshare.”��

How three weeks a year in a range of holiday timeshare properties constitutes land and title remains unclear.��

Smith also confirms that the family is stuck with the scheme until 2076, or 99 years from when it was established by the member the Booths bought it from.��

“The member owns the title to the land which will transfer to the executors of their estate upon their deaths, same as any other real estate ownership,” Smith says.

Filo says the average duration of Classic Holidays timeshare ownership is currently 15 years.��

What are the options for the Booths? “They can rent it out, they can exchange it or they can gift it,” Filo says.��

What they can’t do is simply exit the timeshare scheme.

Passing on the bad deal

This Booth case follows a case we investigated earlier this year, in which an 87-year-old woman named Anne Begbie was unable to get out of a 99-year Classic Holidays contract (ending in 2084) at Pacific Palms Resort on the NSW mid-north coast despite the best efforts of her daughter, Lindy Mason.��

A Classic Holidays sales consultant told Mason “the liability of the annual fees will pass on to the beneficiaries of the estate. If annual fees are not paid, then first they add interest and then if they remain unpaid, [Classic Holidays] will get debt collectors.”

In other words, the fees for the timeshare, about $824 annually plus maintenance costs of $1900 every five years, would pass on to Begbie’s children for the next 65 years.��

Eventually Classic Holidays agreed to replace the 99-year contract with a new six-year deal, costing $12,500 for the life of the contract.��

Anne took the deal believing it was the only way she could end the contract and prevent the fees from continuing.��

����Vlog lodged a complaint with ASIC about the matter on the grounds that the advice Begbie and her daughter received was misleading and deceptive, and we’ve urged the regulator to take action against Classic Holidays.����

Industry body looking after its own?��

In John Booth’s view, the Australian Timeshare and Holiday Ownership Council (ATHOC), the industry body for timeshare operators, does little to protect timeshare members. Booth’s emails to ATHOC went unanswered, he says. ��

It’s worth noting that Ramy Filo is also the president of ATHOC, which has a one-page code of ethics that says timeshare operators must “act honestly, fairly, courteously and with integrity in all dealings with the public and with other members”.��

But when the code says timeshare operators must not “exert under [sic] influence, pressure or persuasion on potential purchasers of timeshare products”, it’s not the potential purchasers that ATHOC is worried about, but rather the possibility that pressure sales tactics might be “to the detriment of the public perception of the Industry”.��

In 2017, timeshare operators held about 180,000 sales presentations, according to ATHOC. It says somewhere around 178,000 people owned a timeshare in Australia at the time, and around one million Australians were directly or indirectly involved in a timeshare.��

ATHOC received 1431 complaints in 2017, 56% of which were related to sales.����

John and Linda Booth want to change the game for all timeshare customers stuck in a bad deal.��

“We’re not asking for any compensation or payback,” John says. “All we want to do is get out of the scheme and get the financial obligations out of our estate.”����

The post Trapped in a Classic Holiday timeshare���� appeared first on ����Vlog.

On this page:

• ��$3 million going back to timeshare customers��
• Now or never tactics
• Cooling-off periods
• The elusive value of timeshare points
• Getting stuck in a contract
• Can you on-sell the deal?
• The timeshare industry speaks
• Timeshare regulations and redress

The only catch is that you have to attend a seminar on holiday timeshare properties. It’s a strange arrangement, come to think of it. You won the holiday, but now you have to pay somewhere between $20 and $40 to attend the seminar. The deal is that you have to sit and listen to the spiel in order to claim the prize. But no worries, you’ll get the money back once you show up. They just want to make sure you come.

How did this windfall come your way? In a typical scenario, you were approached by a friendly-seeming sort, waving a scratchy card, probably at one of the Gold Coast theme parks such as Dreamworld, Movie World or Wet ‘n Wild.

Or you could have been accosted at a shopping centre or expo, or perhaps you found your way to a timeshare seminar through some other marketing manoeuvre.

It’s important to understand that these are holiday club or vacation exchange timeshares such as The Holiday Club (now called Ultiqa) and Classic Holiday Club we’re talking about, not timeshares in which you actually share ownership of a property. The operation involves trading points for hotel rooms and would generally be run out of a Queensland business address at or near Surfers Paradise.

��$3 million going back to timeshare customers��

On a side note, ����Vlog referred the timeshare industry to ASIC in 2016 on the grounds that its sales tactics are deceptive and misleading and its overly long and seemingly inescapable contracts are unclear and unfair.

We followed up with a more specific complaint regarding the quality of financial advice that Ultiqa, one of Australia’s biggest timeshare businesses, offers its customers. We also pointed to an unfair contract term in its loan contract.

In September 2018, ASIC announced it had won a case against Future Holiday Finance (FHF), which provides loans for Ultiqa memberships, on the grounds that its loan assessment practices were not compliant with the law and the contract term we referenced was in fact unfair.

The clause has now been removed and won’t be enforced in existing contracts, and FHF has agreed to refund up to $3 million to affected customers.��

FHF has also agreed to review all Ultiqa loans contracted between�� 1 July 2012 and 30 August 2018. “Refunds will be provided to customers where contracts were not suitable”, ASIC said in a statement.

Now or never tactics

At the seminar you’re given a chance to sign up to a timeshare scheme and enjoy regular bookings in major hotels at cut-rate prices. Just think of it – deluxe rooms lined up every year that you could never have afforded otherwise. We’re talking premium properties around the world!

The catch this time is that you have to sign on the dotted line right then and there, or the offer is off the table. And signing the contract means agreeing to hand over a fairly whopping sum, somewhere between $12,000 or $25,000 or more, depending on which scheme provider you go with and how many points you buy. And that’s not including the ongoing annual fees.

Cooling-off periods

As the seminar winds up, the wheeling and dealing comes fast and furious. The salespeople are working on commissions – the more timeshares they sell, the more money they make.

One of the many disaffected timeshare clients who have ripped into timeshare schemes on social media describes an $18,880 deal dropping to a $9350 “special offer” in a matter of minutes. It seems the timeshare spruikers really want to lock you into the deal before you have a chance to go away and think about it.

And how long do you have to think about it? Ultiqa (formerly The Holiday Club), one of Australia’s largest timeshare operators with around 12,500 members, gives you a mere seven calendar days to read and understand its 39-page, largely incomprehensible product disclosure statement (PDS).

In the past, timeshare operators have given customers a mere five days to back out; they are now technically required to allow 14 days if they’re not members of the Australian Timeshare and Holiday Ownership Council and seven if they are.

But beware: if you do want to bail out before the cooling-off period ends, timeshare operators can be hard to contact.

The elusive value of timeshare points

High costs, low rewards

Timeshare schemes may be one of the most diabolically clever scams going, one that can bring about a steady drain on your finances with no escape in sight. They may work for some people, but many are sorry they signed up.

Or maybe some people just think they’re getting a good deal. Ultiqa’s scheme, for instance, is absurdly complicated. As with other timeshare providers, you buy into the scheme with a sizeable upfront fee and sign a contract that locks you into long-term membership, 80 years long in some cases.

Membership includes timeshare points, which you trade for hotels rooms and the like – but only if you loyally pay the annual fees and other one-off levies that may appear on your invoice. Or you can buy points separately depending on the type of membership.

With the many different types of Ultiqa points on offer, the convoluted relationship between those points and varying expiry dates, figuring out whether the scheme is delivering value for money is virtually impossible.

Contracts also commit you to paying annual fees, around $200 to $300 generally, for the life of the contract, whether or not you use the scheme. The more holiday points or credits you have at any given time, the higher the annual fees. But with some schemes the fees are really off the charts.

In one case on record, 20,000 points cost a seminar attendee $19,100 – an initial outlay that didn’t include the annual fees (these added up to $2875 over a three-year period).

The idea is that you redeem the points for hotel rooms, and sometimes cruise ship bookings or airfares, or trade them for hotel rooms offered through other timeshare schemes. Will the holiday amenities you end up getting be worth the money you end up paying? Many consumers would say no.

What are the points actually worth?

In one case that ended up in the NSW Consumer, Trader and Tenancy Tribunal (now the NSW Civil and Administrative Tribunal), a woman used 14,000 credit points through the Worldmark South Pacific Club to buy what was supposed to be a room with ocean views in Fiji for a week. The room she and her family ended up in had no ocean views and was cockroach-infested.��

It was only the second holiday she’d taken using points, yet she’d already paid $18,000 to the club. Worldmark calculated the cash value of the points used for the Fiji trip, which included the room and two airfares, at $2662. The woman who brought the case to the tribunal thought the package was worth around $12,000 according to the number of points she used.

This underscores the fact that timeshare scheme providers can value the points however they want and change that value at any time. When the woman joined the club she bought 6000 credit points for $12,300, or $2.05 per point. When she redeemed points for the Fiji trip they were worth $0.19 each according to Worldmark’s calculations, which the tribunal accepted.

Ultiqa’s website says it will show you how to use and make the most of your points – only it doesn’t. Its PDS, on the other hand, lays out a stupefying explanation of the convoluted relationship between Usage Points, Accommodation Points, Permanent Points, Standard Points, Getaway Standard Points, Getaway Gold Points, Term Points, Platinum Points, Platinum Points II, Linked Points and Term Interests – all of which relate in some way or another to members booking hotel rooms or holiday apartments.

In any case, Usage Points expire after three years if you don’t use them – but you keep on paying the annual fees. ��

Paying more for less

The promise with timeshare schemes is that they’re a cheaper way to holiday, but you’d never be able to verify that with the materials provided at the seminar. Upon closer inspection, you don’t have to be a maths whiz to see why it might not add up, especially when the ongoing fees are factored in.

In one case we reviewed a timeshare customer signed on to paying $175 a month over 10 years plus annual housekeeping and maintenance fees. Wouldn’t just booking a hotel room outright be cheaper, since the points are predicated on short-term stays?

In another case, a customer shelled out $28,680 for 5000 points from a timeshare provider (not including annual fees) but the properties she wanted to book were never available when she wanted to travel.

Alarmingly, we saw evidence of timeshare contract terms that say other unspecified fees may be added during the life of the contract and that fees can change without notice.

Getting stuck in a contract

In 2016 the Bullivants (Ian and Marjorie) got in touch with ����Vlog after unsuccessfully trying to get out of a Classic Holiday Club contract they’d signed in April 2013 at a seminar in the Sydney suburb of Parramatta.

They were led to believe at the seminar that��they would be able to convert��points from an Accor hotels scheme to Classic Holiday Club points, but upon reading the PDS it seemed the points weren’t transferable after all.

Seven days was a very tight timeframe for the Bullivants, who run a farm in rural NSW, to properly review the paperwork and take action. Classic Holiday Club hadn’t provided a fax number to send in the cancellation notice, only a PO Box. They scrambled to find the fax number and found their way to a neighbour’s fax machine, getting in the cancellation notice just in time.

Shortly after, Classic Holiday Club contacted the Bullivants and stated emphatically that the Accor points could be transferred over. The couple agreed to��a replacement contract based on this commitment by an eager salesperson and paid $6990 to buy into the Classic Holiday Club scheme.

When they tried to transfer points from Accor to Classic Holiday Club, Accor said it couldn’t be done and the Bullivants ended up losing a year’s worth of Accor points. They are now��locked into a 20-year Classic Holiday Club membership with annual fees of about $200. The only reason they joined was to transfer the Accor points.

Their attempts to exit the contract have been repeatedly knocked back, and Classic Holiday Club has threatened to refer them to a debt collection agency to get its ongoing fees.

Marjorie Bullivant never gave up the fight, despite the threatening letters and continuing sales pitches. “Every time they call they keep you on the phone trying to manipulate you,” she told us. “What if we offer you this, what if we offer you that? It’s a con. They’ve now admitted that they said they would do something that couldn’t be done. As far as I’m concerned they owe us all the money we’ve paid so far. It was all just blatant lies.”

(Following ����Vlog’s involvement in the case, Classic Holiday Club eventually agreed on a settlement with the Bullivants.)

We were contacted by another consumer who paid $1550 for a 15-year membership in Classic Holiday Club in 2012. Annual fees started at $149 but jumped to $199.��

This customer found that the promised rooms and cruise ship spots had to be arranged far in advance but paid for in full with their timeshare points up front, and the offerings fell short of what he was led to expect. Rooms or cruise ship spots were never available during school holidays, for instance.

He tried to get out of the contract but was threatened with legal action. When he attempted to sell his timeshare package at a fraction of what he’d paid for it, there were no takers. It’s a problem apparently faced by many looking for a way out.

Can you on-sell the deal?

A secondary timeshare market has emerged that, in the words of one social media commenter, is full of desperate people “who want to offload their timeshares and are gutted by the annual maintenance fees”.

Timeshare points generally fall to about half their original value in the aftermarket. The unsuccessful on-seller we heard from was finally allowed to quit the contract and stop the annual fees, but there was no refund of his initial fee or any other fees. And he had to sign a non-disclosure agreement.

Another consumer whose case we reviewed had the same experience. He tried to get out of the $199 annual Ultiqa fee but was initially told he was stuck with the contract until 2025. He finally got out, but didn’t get a refund.

The timeshare industry speaks

Ultiqa managing director Mark Henry rejected the notion that the scheme isn’t giving customers a fair return for their money when we spoke to him in 2016, saying “these properties represent excellent value as they are in most cases specifically timeshare resort properties and therefore only attract an annual maintenance or levy fee as a cost for week-long stays”. He added that “the volume of complaints annually is only a very small percentage of our membership base”.

But Henry also touched on some of the issues that have given rise to complaints, such as having to book up to 12 months in advance. And if you want to cancel a booking any later than 45 days before the date, there is no refund. “All accommodation is subject to availability, which is clearly stated to members and is also set out in our product disclosure statement,” Henry said.

He also confirmed that signing the contract seals the deal if you don’t change your mind within a week. “Once the cooling-off period has expired the client enters into a legally binding contract.”

Addressing complaints about lack of accommodation availability, Classic Holidays Managing Director Mark Stephenson said in 2016 that members may mistakenly think rooms are unavailable based on website listings but should call the head office to be sure. “It must also be remembered that there may be extenuating circumstances leading to us to not being able to provide a member with accommodation, such as their providing short lead times,” Stephenson said.

“Whilst we strive to attain 100% customer satisfaction and would clearly like to restrict the number of complaints to zero, what we do receive measured against the 65,000 members we have is small,” he added.

The Australian Timeshare and Holiday Ownership Council (ATHOC) told us that timeshare operators are tightly regulated and are required to uphold a number of consumer protections when they promote and sell their schemes, including providing a product disclosure statement, allowing a cooling off period, and having an internal dispute resolution process. Customers can also file a complaint with the Financial Ombudsman Service or the Credit and Investments Ombudsman Service if they’re not happy with the timeshare operator’s response.

“If a consumer was actually misled as to the benefits or features of timeshare and made a complaint to a timeshare business, the timeshare business would, on most occasions, offer to cancel the consumer’s membership and refund monies paid,” ATHOC general manager Laura Younger told us. “Our industry goes to great lengths to ensure anyone who is considering buying into a timeshare scheme and anyone who does buy into a timeshare knows exactly what the costs and benefits are.”

Timeshare regulations and redress

Is the timeshare industry regulated?

Timeshare schemes are regulated as managed investment schemes under the Corporations Act 2001, though timeshare operators point out that the schemes are a “lifestyle” product and not an investment that will gain in value. Nevertheless, the operators hold financial services licences and are overseen by ASIC.

In 2005, a Parliamentary Joint Committee on Corporations and Financial Services recommended that the Act be expanded to include special provisions against pressure selling at timeshare seminars and full refunds for those who fall victim to it. The Committee also recommended that the Act be broadened to prohibit timeshare deals that hinge on signing a contract immediately, that the Act mandate a minimum 10-day cooling off period that can be put on hold if the customer asks for more information, and that it include anti-hawking measures that would restrict unsolicited contact aimed at steering people toward a sales seminar.

Hawkers would also have to reveal that scratch-card holiday winners and the like were actually being directed toward a timeshare seminar, and now-or-never offers would be off the table once they got there.

The recommendations to amend the Act to address these specific timeshare concerns were not taken up, and it’s worth pointing out that it was complaints from the timeshare industry about over-regulation that gave rise to the parliamentary inquiry in the first place.

Most of the 700 or so timeshare sales reps working in Australia don’t have university degrees or other tertiary qualification, and they are exempt from the ban on conflicted remuneration brought in by the Future of Financial Advice (FoFA) reforms. Staff turnover is high in the industry.

FOS to the rescue?

The Financial Ombudsman Service (FOS) has ruled in favour of timeshare customers seeking to exit a scheme on at least two occasions, and for the following reasons:

• The timeshare provider did not take the customer’s personal circumstances into account and gave what amounted to inappropriate financial advice by recommending that she buy 20,000 points in a timeshare scheme. In this case, the timeshare provider was directed to pay back $17,975 plus interest.
• False and misleading statements were made by the timeshare provider during the sales presentation, and critical information was left out. In this case, the timeshare provider was directed to refund half the client’s money plus interest: FOS ruled the customer was half to blame for failing to read the product disclosure statement.

But in another case, FOS knocked back a complaint on the grounds that the customer should have read the PDS.

You can direct timeshare complaints to FOS as well as the Credit and Investments Ombudsman Service.

The post Holiday timeshare schemes appeared first on ����Vlog.

On this page:

• Should you invest in a timeshare?
• How to buy a timeshare
• How much does a timeshare cost?

We look at five timeshare companies – Accor Vacation Club, Classic Holiday, Marriott Vacation Club, Ultiqa Lifestyle and Wyndham World Mark South Pacific Club – to find out how they compare to the costs of booking online accommodation in Surfers Paradise, Queensland.

Should you invest in a timeshare?

The short answer is no. Based on our number crunch and the complaints we’ve received from our members, ����Vlog does not recommend any timeshare product. The best thing you can do is avoid these high-cost holiday traps and book each holiday as you need it.

Some timeshares can take from 11 to 38 years to work out cheaper than simply booking a Surfers Paradise apartment online every year. Other timeshares will never be cheaper than booking online.��

The contract is the catch. A typical timeshare contract locks you in for 40 to 60 years or more, and you’re obliged to pay fees every year, whether you book a timeshare or not.��

These fees are also subject to a percentage increase every year, compounding your costs. For the cost of a timeshare in Surfers Paradise, over the life of the contract, we found the entry fee plus the ongoing fees could add up to as much as $450,000.

Another downside? If you’re travelling at peak times you may have to plan up to a year in advance to secure your timeshare accommodation, so it can be far less flexible than booking yourself or visiting a travel agent.

How does timeshare work?

Timeshare memberships come with a set number of points for members to spend on accommodation each year. For example, you might buy into a 6000 points a year membership for a one-off cost of $30,000.��

Every year you receive the 6000 points – but you also have to pay fees every year.

The number of points you need to book accommodation will vary depending on the season (high or mid), how long you stay and the type of accommodation, but they’re capped at the original price for the duration of your contract.

Accommodation

Accor Vacation Club, Classic Holiday, Marriott Vacation Club, Ultiqa Lifestyle and Wyndham World Mark South Pacific Club have accommodation in several destinations in Australia and worldwide.��

Accommodation reservations can be made online or over the phone. Bookings are available from 11 to 20 months in advance, depending on the contract, and you’re encouraged to book early.����

They’re processed on a first-to-book, first-served basis, subject to availability. Higher or different level memberships have a larger booking window at Accor, Marriott and Ultiqa. Some of our ����Vlog members complained about the long lead-time and a lack of available accommodation when they tried to book.

Contract periods

• Accor Vacation Club’s contract runs until 2080
• Wyndham has two options: the Premier ownership with all the perks runs until 2080, while the Standard ownership will continue for the lesser of either 40 years from purchase or the life of the Club
• Classic Holiday runs until 2084
• Ultiqa Premium ownership continues until 2081, or the Standard option for 40 years
• Marriott operates until 2061.

There are no termination clauses in any of the product disclosure statements (PDS), so once you sign up, you’re locked in for the lifetime of the club or the agreed contract period.

Fees and levies

Membership comes with a series of costs:

• Upfront membership fee
• Annual levies, increasing every year at up to 6.5% or the Consumer Price Index (CPI), for operating expenses such as management fees, landscaping, cleaning and refurbishment costs, as well as administrative expenses��
• Additional costs for housekeeping once you’ve used the limited complementary allowance��
• Additional costs for using international properties
• Mandatory fees like ‘establishment fees’ and exchange fees

How to buy a timeshare

You can buy a timeshare by attending a presentation by the club, or you can buy one online or privately from a member looking to offload theirs.

But you can only buy a timeshare contract with full or premium membership by attending a presentation.

Timeshares bought online or privately usually come with restrictions. For example, your accommodation options might be limited to the number of resorts available at the time of signing up, or to resorts within Australia, or you might have smaller booking windows.

We sat through presentations at Accor, Classic Holiday and Wyndham to bring you this information.��

At the presentation, an agent:

• flogs you the membership perks
• asks questions about your holiday patterns
• determines the amount of points you need a year for your travels
• offers you a membership according to your travel habits.

The membership offered will include a certain number of points each year. If you need more points, you can accumulate them for one or two years or borrow from an upcoming year (for Wyndham this only applies to the Premier Ownership).��

Alternatively you can switch to a higher membership with more points included, but you may have to pay a fee for upgrading.

How much does a timeshare cost?

So, if you’ve got your head around all of that, the timeshare structure seems quite straightforward. You sign a timeshare contract and you’re locked into compounding annual fees, much like the compounding interest on your mortgage, for the duration of the contract.��

For the full membership option, that’s until 2061 for Marriott, 2080 for Accor and Wyndham, 2081 for Ultiqa Lifestyle and 2084 for Classic Holiday timeshare – much longer than the standard 30-year mortgage.

So how much money are we actually talking about over the lifespan of the contract? From around $100,000 to $450,000.

Cheapest

The least it will cost you for one week’s accommodation each year for the duration of the contract is $103,637, if you holiday in a one-bedroom apartment in mid season with Accor.��

Most expensive

At the other end of the scale, a two-bedroom apartment with Marriott in high season will lock you into $450,001 for the term of the contract.

Timeshare finance

At timeshare presentations for Accor Vacation Club, Classic Holiday and Wyndham, we were also offered a financing scheme. With a 10% upfront deposit on the membership fee, you could finance the rest over a period of seven and ten years respectively, with an interest rate of 14–15%. Doing so would of course add even more debt to your timeshare contract.

Timeshare holiday vs self-booked holiday

To figure out if a timeshare is worth it, we calculate how long it takes for the ongoing annual costs of a timeshare in Surfers Paradise to be cheaper than the cumulative cost of booking an apartment online every year. This is listed as ‘Years to recover costs’ in our comparison table below.

The result? It would take a minimum of 16 years before a timeshare became cheaper than booking your own holiday online, based on an annual family vacation in a two-bedroom apartment during high season (based on Accor Vacation Club and Ultiqa Lifestyle contracts).

But if you’re booking that same holiday with Marriott Vacation Club or Wyndham World Mark South Pacific Club, your timeshare is unlikely to ever be cheaper than booking independently online.��

OK, so perhaps timeshare isn’t for families travelling to the Gold Coast in the school holidays. What if you’re not bound by the school holidays?

Ultiqa Lifestyle’s two-bedroom apartment will become cheaper that a DIY booking in 11 years, but a one-bedroom apartment with Marriott Vacation Club, even outside school holidays, will again be more expensive for 43 years. After five years, Marriott’s costs for a two-bedroom apartment for one week in high season is 938% more than booking.com.

The fees and costs used in our calculations were collected by us from Booking.com and provided by the timeshare companies between November 2017 and January 2018. For Classic Holiday, Marriott and Wyndham, we use averages of the offered rooms to calculate the number of points required. An inflation rate of 1.8%/annum is applied to the average cost of similar accommodation on Booking.com over the same time frame. The period 2018–22 was used to calculate the estimated cost after five years.

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