Here is a brief outline of the changes and the current timeframes that are to be worked with. Members of the Board will be meeting with the Parliamentary Secretary to the Treasurer, ASIC and Treasury in the week beginning February 26, 2007 to discuss a number of issues that come from this. We will report back to you following this meeting.

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 their policy.

TIME FRAMES

Time-sharing promoters, operators and schemes have until 30 September 2007 to comply with the new aspects of the ASIC policy. So, for example, time share operators will have until 30 September 2007 to comply with the updated cooling off requirements. Similarly, certain closed or member controlled clubs will have until 30 September 2007 before needing to meet internal dispute resolution requirements (instead of current requirement to be a member of an ASIC approved EDR scheme etc).

Existing exempt schemes may rely on the existing conditions in the ASIC exemption document previously issued until the end of September. For example, exempt schemes which satisfy the previous ISB condition by being members of ATHOC or of FICS will presumably still satisfy that condition until 30 September, 2007 by such membership.

The removal of the ISB concept applies from 7 February 2007.  Also the relief for timeshare operators who want to resell timeshare interests without holding an AFS license may be available immediately if an operator wanted to request it.



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.

It is now required 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.

Cooling-off rights

Under these changes you will be required to have a cooling off period of 14 calendar days.

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.

Removal of Industry Supervisory Body (ISB) concept from ASIC policy

ASIC has pre-empted the outcome of the Administrative Appeals Tribunal by making this announcement. We have not as yet heard from the AAT and are amazed that they should proceed with this at this time.

ATHOC have made a number of attempts to engage with ASIC on this issue and there was a constant change to their requirements. Hence the reason that ATHOC has taken this further. We cringe at their comment that “In the six years since that policy was made, no application was made to ASIC that satisfied these criteria.” Particularly given that we worked with their recommendations that were then not acceptable.

LEGAL ADVICE

You should note that ATHOC is not in a position to give legal advise to you and recommends that you should contact your solicitor for advice.

FULL DOCUMENT CAN BE FOUND AT
www.asic.gov.au/ps or call the ASIC Infoline on 1300 300 630.