ASIC today released a consultation paper proposing to remake three class orders relating to time-sharing schemes, which are due to expire (‘sunset’) as at 1 April 2017 or 1 October 2017.
We are seeking feedback from the time-sharing industry, consumers, consumer advocates and other interested parties on our proposals, including whether any additional protections are required to assist consumers.
As marketing of time-sharing schemes is an area which can involve pressure selling tactics, we have requested feedback on whether amendments are required to current requirements to improve consumer protections, including in relation to cooling-off, disclosure and sales practices. For example, we are seeking feedback on:
- whether the current cooling-off arrangements are working effectively or whether alternative arrangements would be more appropriate;
- proposed amendments to the template cooling-off statement to simplify the language and highlight key information for consumers, such as the contact details of the provider and that if an applicant does not exercise their cooling-off rights they may be required to continue to pay levies for an extended period (e.g. until they die) even if they do not use the time-share;
- the introduction of more tailored disclosure requirements for fees and costs associated with the purchase of interests in a time-sharing scheme; and
- whether any additional restrictions or obligations are required in relation to unsolicited meetings or telephone calls.
We are also proposing amendments to our guidance in Regulatory Guide 160 Time-sharing schemes (RG 160) to outline our expectations for compliance by operators and promoters of time-sharing schemes based on our regulatory experience in areas such as:
- the content of Product Disclosure Statements;
- the provision of financial product advice; and
- conduct during meetings and seminars attended by consumers.
The instruments that we are proposing to remake with amendments are:
- [CO 00/2460] Time-sharing schemes—property valuations;
- [CO 02/315] Time-sharing schemes—use of loose-leaf price list; and
- [CO 03/104] Relief facilitating the acquisition and sale of forfeited interests in registered time-sharing schemes
In summary, we are also proposing to:
- remake as a single new instrument [CO 00/2460], [CO 02/315] and [CO 03/104];
- incorporate into the new instrument—transitional relief for existing operators relying on [CO 02/237] Time-sharing schemes—operation of rental pool, the template cooling-off statement under Pro Forma 208 and the AFS licence conditions under Pro Forma 209 with amendments, and modifications to the enhanced fee disclosure requirements; and
- make amendments to [CO 13/760] Financial requirements for responsible entities and operators of investor directed portfolio services, withdraw ASIC Pro Formas 205, 206 and 207 for new operators, and update our guidance in RG 160.
The consultation paper and draft ASIC instrument, which reflects the amendments proposed in the consultation paper, are attached below.
The last public consultation by ASIC on policy for time-sharing schemes occurred in 2006 and we see this as an opportunity to consult on whether the policy settings remain appropriate or any changes are required.
The draft ASIC instrument, which reflects the amendments proposed in the consultation paper, is available on our website under CP 272.
Submissions on CP 272 are due 12 January 2017.
Background
Under the Legislation Act 2003, all class orders sunset after a specified period of time (mostly ten years) unless we take action to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.