The Federal Court has ordered timeshare company Ultiqa Lifestyle Promotions (in liquidation) to pay a $900,000 penalty.
The penalty follows the May 2022 Federal Court decision that Ultiqa failed to ensure that financial advice given to consumers was in their best interests.
“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,” said ASIC deputy chair Karen Chester.
“When sold alongside financial advice, it is both fundamental and legally required that the advice is in the consumers’ best interests,” Ms Chester emphasised.
She explained the complexity of timeshare schemes.
“They can be difficult to understand, to compare and to exit. They involve significant long-term financial commitments of tens of thousands of dollars, and are often loan-financed. Further, despite these significant costs, many could not even book holidays in their timeshares due to a lack of availability — meaning, they got nothing for their money.”
Back in May, the court declared that Ultiqa failed to act efficiently, honestly and fairly, failed to provide relevant training to its authorised representatives, and to monitor and supervise them appropriately, as well as to put in place documented policies and procedures to support the advice process.
Consumers reported the upfront cost of joining the scheme was between $10,000 to $25,000, with ongoing annual fees of up to approximately $800. Most consumers who bought into the timeshare scheme took out a loan with a company related to Ultiqa to pay for their timeshare interest.
Justice Downes’ decision in May 2022 quoted a sales manual provided to Ultiqa’s authorised representatives which said, “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.”
Ultiqa ceased promoting the sale of interests in the Ultiqa Lifestyle Scheme on 28 January 2020 and was placed into members’ voluntary liquidation on 30 April 2021.
The Scheme remains active and Ultiqa currently holds an Australian financial services licence, which allows affected consumers to access dispute resolution services through the Australian Financial Complaints Authority.
