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20-321MR ASIC releases updated regulatory guide on time-sharing schemes
ASIC today released an updated Regulatory Guide 160 Time-sharing schemes (RG 160).
The updated RG 160 contains guidance on the existing regulation of time-sharing schemes, as well as some new requirements, and is accompanied by an updated legislative instrument.
Today’s release follows an extensive consultation process involving numerous meetings with industry and consumer representatives as well as Consultation Paper 272 Remaking ASIC class orders on time-sharing schemes (CP 272). It also takes into account the findings from ASIC’s review of advice, consumer experience and financial value research, summarised in Report 642 Timeshare: Consumers' experiences (REP 642).
The updated RG 160 will provide industry with the certainty it requested of ASIC, especially leading up to year end.
Industry generally has until 30 September 2021 to implement the new requirements set out in the updated RG 160. The transition periods will allow firms to implement the new requirements during a period when fewer sales are taking place due to COVID 19.
While ASIC remains concerned about the time-sharing sales practices, we think it is appropriate to give industry some time to implement the new requirements in the updated RG 160 and the new design and distribution obligations (DDO), which commence in October 2021.
ASIC will review the sales practice in early 2022 and if pressure selling conduct leading to poor consumer outcomes is identified, we intend to consider further measures to address this harm.
In addition to the updated guidance on the current regulation, RG 160 contains the following new requirements:
- a new ‘subject to finance’ obligation to allow consumers to withdraw their application for interests in a time-sharing scheme, even after the end of the cooling-off period, where their application is ‘subject to finance’ and they do not proceed with the finance before the loan is provided
- new hardship withdrawal arrangements so operators can allow time-sharing scheme members, who meet hardship criteria, to withdraw where the scheme constitution has been amended to provide for hardship withdrawals
- new compliance and audit requirements for points-based programs to reduce the potential for dilution of members’ interests
- amended disclosure requirements to ensure operators and promoters provide consumers with clear and prominent information about the key features and risks of time-sharing, both verbally and in writing, at sales presentations, and
- amended fees and costs disclosure requirements tailored to the different types of time-sharing schemes and requiring clear disclosure of the upfront and ongoing costs involved in time-sharing.
Transition to new requirements
Under the transitional arrangements outlined in RG 160, the current requirements will generally continue to apply until 30 September 2021 unless operators put in place arrangements for the application of new requirements before this date. Operators of registered time-sharing schemes must comply with the new requirements by 1 October 2021.
Issuers of products disclosure statements for time-sharing schemes will have until 30 September 2022 to implement the new fees and costs disclosure requirements (consistent with changes to fees and costs disclosure more generally in Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements).
The updated RG 160 is based on ASIC Corporations (Time-sharing Schemes) Instrument 2017/272 which incorporates amendments made by ASIC Corporations (Amendment) Instrument 2020/1064 and ASIC Corporations (Amendment) Instrument 2020/1065 (Timeshare Instrument). View a copy of the old instrument before these amendments were made.
ASIC will also review the individual relief provided to state-exempt time-sharing schemes, title-based time-sharing schemes and member-controlled clubs (legacy schemes). ASIC will look to amend this relief to reflect the new requirements under the Timeshare Instrument after consultation with these legacy scheme operators.
In November 2016, ASIC undertook public consultation through CP 272, in which ASIC sought feedback on options to address pressure selling. The feedback received was set out in Report 522 Response to submissions on CP 272: Remaking ASIC class orders on time-sharing schemes (REP 522) in April 2017.
Given the imminent sunsetting date, ASIC remade the relief in the form of ASIC Corporations (Time-sharing Schemes) Instrument 2017/272 in March 2017 and continued to engage with industry and consumer representatives about some of our proposals (Refer 17-084MR). Industry was provided an update on the status of ASIC’s review of the policy settings in August 2018. ASIC has continued to engage with industry regularly since this date.
- RG 160 Time-sharing schemes
- ASIC Corporations (Time-sharing Schemes) Instrument 2017/272
- ASIC Corporations (Amendment) Instrument 2020/1064
- ASIC Corporations (Amendment) Instrument 2020/1065