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Watchdog puts timeshare industry 'on notice' as Coast company probed

Business

A Gold Coast timeshare company, Ultiqa, has been hit with legal action from ASIC as the watchdog warned the industry it was watching it closely.

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ASIC has alleged Ultiqa’s conduct amounted to a breach of its obligations as an Australian financial services licensee to act efficiently, honestly and fairly.

The case followed an investigation by ASIC over the Ultiqa scheme in which it found that consumers were hit with upfront costs of up to $25,000 to join the timeshare scheme along with ongoing fees of up to $800 per year. Some consumers complained to ASIC that they had difficulty booking holidays due to lack of availability.

It’s the first time ASIC has take on timeshare over financial product advice and it warned the sector “it was on notice”. 

It said the case was based on allegations that Ultiqa allegedly failed to ensure that financial advice to consumers to buy timeshare products was in the consumers’ best interests.

Consumer group Choice has also previously complained to ASIC about Ultiqa in which it alleged a breach of the best interest duty. 

In that complaint Choice alleged Ultiqua pressured a couple into purchasing a timeshare contract with finance that could last until 2081, despite the individuals telling the operator they were ‘financially stretched.’ 

ASIC’s case is that Ultiqa’s authorised representatives did not act in their clients’ best interests and did not give appropriate advice based on clients’ circumstances. ASIC claims that some consumers had not sought advice regarding a timeshare scheme and some were not aware they were receiving financial advice.

ASIC deputy chair Karen Chester said timeshare schemes were complex financial products and could be difficult to understand and compare with other products, and involve long-term financial commitments

“The timeshare industry is on notice to ensure existing compliance and advice practices comply at all times with the obligations on all financial advisers, especially for that advice to be in the consumers’ best interests,’’ Chester said.

ASIC further alleges that Ultiqa did not provide relevant training to its authorised representatives; it didn’t monitor and supervise its authorised representatives appropriately, and didn’t have documented policies and procedures in place to support the advice process.

ASIC is seeking declarations, pecuniary penalties and other orders to be made by the Court.

Ultiqa ceased selling interests in the scheme on January 28, 2020, and was placed into members’ voluntary liquidation on April 30, 2021. The scheme remains active, as does the balance of the Ultiqa Group entities. Ultiqa currently holds an AFS licence.

The date for the first case management hearing is yet to be scheduled by the court.

 

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