The federal court found Ultiqa Lifestyle Promotions used “misleading” tactics and “pressured” consumers into signing contracts, in yet another example of mispractice in the timeshare sector.
Ultiqa was found to have breached financial services laws by failing to provide ‘financial advice’ that was in the best interests of consumers between October 2017 and March 2019, the regulator stated Wednesday, after the group advised them to invest in the Ultiqa Lifestyle Scheme despite the arrangement “not being appropriate to their circumstances”.
In handing down the finding, presiding Justice Downs said the group used “tactics to pressure the consumers to sign up at the presentation”, including preventing consumers from obtaining external advice and not giving the clients enough time to discuss and debate the offer. “The focus in giving the advice was on making a sale, and not on acting in the consumer’s interests,” she stated.
The judge also quoted a sales manual provided to Ultiqa sales consultants, which included the directive: “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,” the manual continued.
Money for nothing
Commenting on the court’s decision, ASIC deputy chair Karen Chester said Ultiqa “cornered” consumers into investing in a timeshare scheme they 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,” she added.
Timeshare schemes are financial products involving fractional ownership of holiday accommodation and considered managed investment schemes (MISs). Timeshares remain under the same regulatory umbrella as advice but were carved out from FoFA’s ban on conflicted remuneration by then-minister for financial services Bill Shorten because they are sold as ‘lifestyle products’ and not designed to generate a return on investment.
ASIC has long had concerns about the the timeshare sector. Operators remain obliged to act in the client’s best interest – something the regulator believes isn’t always happening.