Thursday 8 February 2007 LAWFUEL – Legal News Network –
The Australian Securities and Investments Commission (ASIC) today released a number of revisions to Policy Statement 160 Time-sharing schemes [PS 160]. [PS 160] outlines ASIC’s policy on how it will regulate time-sharing schemes including the factors ASIC will take into account in considering applications for relief. ‘This policy statement has been revised to reflect amendments to the law made by the Financial Services Reform Amendment Act 2003 and our regulatory experience since the policy was first issued over six years ago’, ASIC’s Director of Applications and Licensing, Mr John Price said.
In making changes ASIC has also had regard to materials that formed part of a Parliamentary Joint Committee’s recent consideration of the timeshare industry. The key policy amendments in [PS 160] focus on: • allowing certain time-sharing operators with ASIC relief to have internal dispute resolution arrangements that meet s912A(2)(a) of the Corporations Act (the Act) rather than external dispute resolution arrangements; • ensuring the cooling-off period for purchases of time-sharing interests is consistent with the 14 day period set out in the Act; • granting licensing relief for certain time-sharing schemes for the resale of time-sharing interests; and • removing the concept of an industry supervisory body from our policy.
The attachment to this information release summarises the revisions to [PS 160] in greater detail. ASIC will also revise the relief instruments and pro formas issued under [PS 160] to implement these policy changes. ASIC will give time-sharing schemes, operators and promoters and member-controlled clubs until 30 September 2007 to comply with those new amendments to [PS 160]. A copy of the updated policy is available from the ASIC website at www.asic.gov.au/ps or by calling the ASIC Infoline on 1300 300 630.
Attachment to IR07-04: ASIC amends policy statement on time-sharing schemes The key policy amendments to [PS 160] released today can be summarised as follows: Internal dispute resolution arrangements ASIC previously imposed a condition of relief for certain types of closed or member controlled time-sharing schemes that they belong to an industry supervisory body or external dispute resolution scheme.
ASIC subsequently allowed Australian Timeshare and Holiday Ownership Council members to rely on their membership instead of obtaining industry supervisory body membership as a temporary measure. ASIC has removed this condition. Instead it will require that these time-sharing schemes have internal dispute resolution arrangements that meet s912A(2)(a) of the Act.
In having internal dispute resolution arrangements that meet s912A(2)(a) of the Act, ASIC expects that the internal dispute resolution procedures will: • satisfy the Essential Elements of Effective Complaints Handling in Section 2 of AS 4269–1995; and • be appropriately documented. ASIC considers that these changes will result in less cost for industry while maintaining an appropriate level of consumer protection. Cooling-off rights ASIC previously required that the sale of most time-sharing interests be subject to a cooling-off period.
For members of the Australian Timeshare and Holiday Ownership Council, the cooling-off period following the issue or sale of a time-sharing interest is five business days, but for non-members, the cooling-off period is 10 business days. ASIC will still require a cooling off period but has made the period 14 calendar days for all parties. This is consistent with other financial products with cooling off periods under the Act. Resales of time-sharing interests ASIC may grant case-by-case conditional relief from the licensing provisions to allow the resale of time-share interests for certain schemes that are exempt under state law, exempt title-based timesharing schemes or member controlled clubs.
There are a number of conditions on this relief: 1. no more than five per cent of the interests in the timesharing scheme should be re-sold in one calendar year; 2. a cooling-off period of 14 days applies to the resale; 3. there is a separate cooling-off statement and purchasers are given a copy of this statement to keep; 4. records are kept of the cooling off statements provided; 5. all money from a consumer is returned if the consumer decides not to proceed with the purchase of the interest in the timesharing scheme. No administration or other fees must be kept;
6. all money received for the re-sold time-sharing interests is: • paid into an account that is held with an Australian authorised deposit-taking institution; • paid into an account that only has money paid into it that is money received from consumers of re-sold interests in the timesharing scheme and interest on that amount; • paid into the account on the day it is received or the next business day; and • held in trust for the benefit of the consumer who paid the money until any cooling-off period has expired; and 7. the timesharing scheme belongs to an approved external dispute resolution scheme.
ASIC has previously provided this sort of relief to a number of industry participants after individual applications and has now updated its policy in light of that fact. Removal of Industry Supervisory Body (ISB) concept from ASIC policy Previous ASIC policy envisaged the possibility of an ISB playing a co-regulatory role for certain timeshare schemes. To be approved as an ISB certain criteria needed to be met. In the six years since that policy was made, no application was made to ASIC that satisfied these criteria.
ASIC has therefore decided to remove the ISB concept from its policy. For further information contact: John Price Director, Applications and Licensing Telephone: 03 9280 3639 Mobile: 0403 138 537 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769List your legal jobs on the LawFuel Network