Timeshare may see regulatory overhaul after 'distressing' public inquiry

South Africa's timeshare or vacation ownership industry is set for a regulatory overhaul, according to the National Consumer Commission, which regulates consumer-business interaction.  

The NCC on Thursday briefed the media on the outcomes of a public inquiry into the state of the timeshare and vacation ownership industry.

The inquiry was launched in May 2017 after the commission received thousands of complaints. 

Commissioner Ebrahim Mohamed said on Thursday the decision came following a "lengthy struggle" to resolve disputes. The inquiry was meant to "unravel and disentangle", and understand the complexity of the industry. 

Hearings were conducted over a period of six months, and the inquiry was led by chairperson Diane Terblanche, the former chair of the National Consumer Tribunal. Attorney Zandile Mpungose and property lawyer Audrey Ngcobo were also on the panel.

Mohamed said he approved the report and accepted its recommendations to correct structural and behavioural issues in the industry.

Among the concerns raised by consumers during hearings relates to the accumulation of points from vacation club companies - which were worth nothing. Consumers have complained that they paid thousands to invest in timeshare holiday accommodation, but could not get a booking when they needed it, Fin24 previously reported.

• READ: R100k timeshare investment but no holiday, consumer body hears

Mohamed said it was "distressing" to hear of pensioners appealing to government for help. He recalled one particular consumer who considered taking her own life to get out of her "debt-stricken circumstances" which were brought on following her decision to sign a "lifelong timeshare trap", Mohamed said.

NCC anticipates recommendations will be implemented over the medium to long term, depending on industry willingness to engage with stakeholders, he added. The wide-ranging recommendations relate to the management of clubs, competition issues, marketing, credit related complaints, contracts and contracting and legislative reform.

Legislation

Mohamed said that the NCC agreed with a recommendation that over the medium to long term that legislation be passed to centralise regulation of the timeshare industry. It is recommended that a new regulator be created to ensure compliance with legislation.

"The minister (Rob Davies) agreed in principle a need for the overhaul of the current regulatory framework to ensure consumer protection," Mohamed added.

Chief director of policy and legislation at the dti, MacDonald Netshitenzhe, said that the department would start working on the legislation internally. He pointed out that next year there would be elections, with a new Cabinet and Parliament being instituted, which could affect the timeline of legislative processes. 

In the short term, the NCC has asked the consumer goods and service ombud to assess the extent to which consumers can exit contracts without penalty. "In particular, the nefarious in-perpetuity contracts," he added.

The hope is that vacation clubs will agree to cancel contracts for consumers who are vulnerable - such as the elderly and the unemployed, said ombud Magauta Mphahlele.

Mohamed said the report was provided to the Vacation Ownership Association of Southern Africa, which provided positive feedback on the recommendations and said it is willing to engage with stakeholders to resolve matters raised in the report.

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