Karen Chester

The Federal Court has penalised the Ultiqa Lifestyle Promotions company $900,000 after the Federal Court found it engaged in giving poor financial advice to clients by using misleading and high-pressure sales tactics.

The court found in May that Ultiqa engaged in misleading tactics and pressured consumers into signing contracts that were not in the best interests of the client.

During the decision handed down five months ago, Justice Downes quoted excerpts of a sales manual provided to the firm’s authorised representatives which highlighted the sales-focussed nature of the business.

“Once your client is on the sales deck they come to the grim realization that this is a sales environment and what is going through their mind is ‘How can we get out of here?’” it stated.

“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.”

Justice Downes added “pressure” sales tactics were used including making clients sign up during the presentation and in one case preventing them from seeing an outside adviser.

Most consumers who bought into the timeshare scheme took out a loan with the company, with the upfront cost of joining the scheme between $10,000 and $25,000, and ongoing fees up to approximately $800 a year.

Promotion of the Ultiqa Lifestyle Scheme ended on 28 January 2020 and the company was placed into voluntary liquidation on 30 April 2021.

However, the scheme remains active and Ultiqa holds an Australian financial services licence which allows affected consumers to access dispute resolution services like AFCA.

ASIC deputy chair Karen Chester said Ultiqa prioritised sales over appropriate advice and ultimately consumers’ best interests.

“The penalty against Ultiqa, the first against a timeshare provider, sends a further significant message to the timeshare industry,” Chester said in a media release on Monday morning.

“When sold alongside financial advice, it is both fundamental and legally required that the advice is in the consumers’ best interests.”

Chester added timeshare schemes are complex financial products that can be difficult to understand, compare and exit.

“They involve significant long term financial commitments of tens of thousands of dollars and are often loan-financed,” she said.