The Federal Court has ordered timeshare company Ultiqa Lifestyle Promotions Ltd (in liquidation) pay a $900,000 penalty.
The penalty follows the May 2022 Federal Court decision that Ultiqa financial advisers advised consumers to invest in the Ultiqa Lifestyle Scheme despite this advice not being in the consumers' best interests and not being appropriate to their circumstances (22-111MR).
ASIC Deputy Chair Karen Chester said 'Ultiqa prioritised sales over appropriate advice and ultimately consumers' best interests. The penalty against Ultiqa, the first against a timeshare provider, sends a further significant message to the timeshare industry. When sold alongside financial advice, it is both fundamental and legally required that the advice is in the consumers' best interests.
'Timeshare schemes are complex financial products. They can be difficult to understand, to compare and to exit. They involve significant long term financial commitments of tens of thousands of dollars and are often loan-financed. Further, despite these significant costs, many could not even book holidays in their timeshares due to a lack of availability - meaning they got nothing for their money.'
Consumers reported the upfront cost of joining the Scheme was between $10,000 to $25,000, with ongoing annual fees of up to approximately $800. Most consumers who bought into the timeshare scheme took out a loan with a company related to Ultiqa to pay for their timeshare interest.
The Court previously declared that between October 2017 and March 2019, Ultiqa failed to:
- act efficiently, honestly and fairly;
- provide relevant training to its authorised representatives;
- monitor and supervise its authorised representatives appropriately; and
- put in place documented policies and procedures to support the advice process.
Justice Downes' decision in May 2022 quoted a sales manual provided to Ultiqa's authorised representatives which said, 'Once your client is on the Sales Deck they come to the grim realization 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.'
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 Australian financial services licence, which allows affected consumers to access dispute resolution services through the Australian Financial Complaints Authority.
