Entry-level timeshare purchases across both the UK and Europe are running at about £20,000 according to the Timeshare Consumer Association. Many purchasers have had to resort to high-interest-bearing unsecured loans to purchase what they thought was a product to give them the continual right to have the holidays of their dreams. Some years ago the timeshare product went through one of its regular facelifts and the “fractional ownership” product arrived.
Dan Keating, spokesperson for the Timeshare Consumer Association says “Fractional ownership is really timeshare by any other name; the difference is that the buyer technically owns a fraction of the bricks and mortar” A logical question for us to ask would be “is this now not just a holiday product, but more of an investment?” Keating was quick to point out that any form of timeshare, including fractional ownership should never be considered as an investment, he went on to say “The 2008 EU Timeshare Directive specifically outlawed the selling of any long-term holiday product or timeshare as an investment”.
Information divulged at the Parliament Treasury Committee meeting revealed that three large institutions being Barclays Partner Finance, Shawbrook Bank and Novuna, formerly Hitachi have historically been more than happy to lend money to would-be timeshare purchasers. Keating pointed out that “whilst borrowing high-interest finance to buy any form of timeshare is illogical, in certain circumstances it may also be in contravention of the law”. By this, Keating is referring to fractional ownership. Our research indicates that sales staff at various timeshare resorts intimated that buying timeshare via the fractional route represented an investment, which of course is against the law.
Timeshare specialist lawyers and regulated claims management companies started to present claims to lenders citing this obvious breach of the law. Barclays Partner Finance decided to challenge a decision of the Financial Ombudsman Service (FOS) who upheld a claim which culminated in a judicial review in the high court in March last year. The presiding judge gave clear direction as to the way forward, and for the most part sided with the decision of the FOS. One year later Abby Thomas Chief Executive and Chief Ombudsman at the FOS has had to appear in front of the Parliament Treasury Committee to explain why none of the resolved cases had been financially settled by the lenders. Dame Angela Eagle, Labour MP for Wallasey, and committee member, pulled no punches in addressing Ms Thomas. Dame Angela didn’t hold back either with her opinion as to fractional timeshare. On a number of occasions she referred to the product as “dodgy” and on one occasion, actually used the word “con”.
In total, the discussion between Dame Angela and Ms Thomas went on for some 16 minutes so a lot was covered no doubt giving the FOS greater food for thought. The last word goes to Keating “given that timeshare owners in the UK are in the minority with less than 1% of the population owning and with fractional owners being substantially less, it’s refreshing that the Parliament Treasury Committee have allocated time from their busy schedule to discuss this ongoing problem”
