The CEO of a consumer advocacy group has welcomed the Federal Court’s decision.
On Tuesday, 17 May, the Federal Court found that Ultiqa Lifestyle Promotions had failed to ensure that financial advice given to consumers was in their best interests.
In a statement, ASIC said that financial advisers acting as authorised representatives of Ultiqa advised consumers to invest in the Ultiqa Lifestyle timeshare scheme between October 2017 and March 2019, despite the fact that this advice was inappropriate to their circumstances.
CHOICE CEO Alan Kirkland backed the decision, saying it shows that “Ultiqa’s harmful sales practices were based on pressuring people into buying complex, expensive and lengthy financial products”.
“Timeshare salespeople are subject to financial advice laws. This means that advisers selling timeshare need to give advice that’s in the best interest of their customers,” Mr Kirkland said.
“It’s pretty hard to reconcile that legal duty with the high-pressure sales practices described in the Federal Court’s decision.”
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.
A sales manual provided to Ultiqa’s authorised representatives and quoted by Justice Downes in her decision read: “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.”
Mr Kirkland’s statement continued: “These sorts of practices are rife across the timeshare industry, so this decision sends a huge warning to other timeshare salespeople and operators.
“The timeshare industry is now on notice. Its sales practices and contract terms need to change – otherwise operators should expect more court action.”
ASIC confirmed this week that 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 AFS licence, which allows consumers to access dispute resolution services through the Australian Financial Complaints Authority.
Any idea what the penalty will be? Oh that’s right only financial planners get fined or jailed. The real crooks like timeshare companies simply wind up the company and set up shop next door, doing the exact same thing. ASIC is a joke.