Timeshare inquiry calls for revised regulatory framework

Thursday, December 6, 2018

The National Consumer Commission (NCC) has released the much-awaited report into the inquiry on consumer complaints on timeshare, which has called for a revised regulatory framework.

The NCC - which is the chief regulator of consumer-business interaction in South Africa – briefed reporters at the Government Communication and Information System (GCIS) head office in Tshwane on Thursday.

In May 2017, the NCC announced the appointment of a three-member inquiry panel to look into the root causes of consumer complaints in the timeshare industry. At the time of the announcement of the panel, the commission said it viewed consumer complaints about the industry as valid and warranted.

The report, said NCC Commissioner Ebrahim Mohamed, was not the outcome of an investigation in context with the Consumer Protection Act (CPA) but that the inquiry was meant to unravel and understand the complexities of the industry as well as assess the extent of consumer challenges.

Recommendations made in the report, which was finalised in August, are mainly to correct the structural and behavioural problems facing the industry.

The commission said the industry in its current state has been a source of frustration and anger to many consumers, an element noted during public hearings held by the commission across the country.

The report found that most problems experienced by consumers with regards to the industry were with the points system in the industry and not with conventional timeshare.

Mohamed said recommendations relating to the revision of regulatory framework included that Trade and Industry Minster Rob Davies prescribes in term of the Consumer Protection Act (CPA) certain information including the manner and form of such information that intermediaries must be provide to consumers before transactions between consumers and clubs can be concluded.

The other recommendation related to the revision of the regulatory framework is that all timeshare contracts including Purchase of Points and Membership Application Agreements be defined as fixed term contracts, running for a fixed, shorter period, subject to renewal by agreement between the club / developer and the member.

“The limit should attach to Purchase of Points and Membership Application Agreements. This can be attained in the short term through promulgation of regulations in terms of Section 14 of the CPA,” said Mohamed.

Revising the Property Time Sharing Control Act

The report also highlighted that there was an opportunity to consider also revising the Property Time Sharing Control Act (PTSCA).

Among others it recommends that the Minister promulgates Regulations in terms of Section 12 of the PTSCA prescribing the information which should be disclosed in writing by a seller to a purchaser prior to the signature of any contract by a purchaser.

The NCC accepted the proposal that a modern, industry focused, comprehensive piece of legislation that centralises regulation of the timeshare industry in South Africa be passed, in order to bring consumer protection in the timeshare industry in the country on par with the rest of the world.

It also accepted that a new regulator be created and tasked with enforcing compliance with existing and future legislation in the medium to long term.

Meanwhile, the NCC has held discussions with Davies in relation to the recommendations and the need for him to consider a revising the applicable laws within his administration in order to further consumer protection within South Africa.

“The Minister has in principle agreed that there is a genuine need to overhaul the regulatory framework in order to ensure consumer protection. Work in this regard has already commenced within the dti,” said Mohamed.

Chief Director in the Consumer and Corporate Regulation division at the dti MacDonald Netshitenzhe said that the department will analyse the report.

“Now that the report is released, we need to analyse it and maybe also seek legal opinion to guide us correctly.  The report is multi-faceted, and work internally is going to take place this year,” he said.

Deputy NCC Commissioner Thezi Mabuza advised consumers to be sober-minded when signing timeshare contracts.

“We have picked up a trend that most consumers enter into these contracts when they go on holiday especially now because you are part of a club they’ll come to you and market for extra points, so we ask you when you go to these sessions, please don’t take your family along.

“If you are really interested to understand a product further, go alone as a decision maker, you are not under any pressure to sign where you are told it’s a once off offer, take contract along and ask them to give you some space so you can read and understand the contract, if they’re not willing to, rather walk away,” she said. - SAnews.gov.za