Address by Commissioner Ebrahim Mohamed at the Media Briefing to Launch the Public Inquiry Into the Vacation Ownership / Timeshare Industry




Deputy Commissioner of the National Consumer Commission, Ms Thezi Mabuza

Inquiry Panelists,

Members of the media,

Officials of the NCC present,

Ladies and gentleman,

Good morning.

Thank you for gracing us with your presence this morning, as we launch this very important inquiry in the vacation ownership industry. I am confident that this tried and tested process will assist the NCC to finally guide the way forward in making recommendations that will lead to solutions to problems and challenges faced by consumers.

The National Consumer Commission has always held the view that complaints from timeshare consumers are valid and warranted. We adopted this view based on our assessment of individual complaints over time, thousands of them may I add, which have been lodged against holiday clubs and their value chain role players over the past nearly two decades since I joined the former Office of Consumer Protection at the Department of Trade and Industry.

A myriad of allegations has been levelled against role players of the vacation ownership or timeshare industry, and these are serious allegations, some of which fly in the face of the provisions of the Consumer Protection Act, which is a law created as an extension of our Constitution for purposes of protecting and guaranteeing the social and economic welfare of citizens in the commercial space.

Consumers allege amongst others that they have been misled into signing up for lifetime contracts that can never ever be cancelled. They further allege that companies overbook and over sell accommodation, and that timeshare companies threaten them with litigation if they cannot afford to pay levies for properties which they never get to stay in because the properties are always fully booked.

The most disturbing aspect of it all, I think, is that the vacation ownership industry has done little or nothing to correct itself, which is naturally what every industry should be doing when issues are raised with its role players' conduct, products or services.

It is disgusting in my view that captains of this industry can turn a blind eye on the relentless pain and suffering of consumers for such a long time.

In 2015 the NCC lodged an application with the National Consumer Tribunal following an investigation into the three major holiday clubs. It later withdrew these cases because of technical defects in them that were potentially harmful to its case. We were legally challenged by these clubs, and the NCC realised that it would prove very costly for taxpayers to proceed with a matter that would address industry-wide challenges.

NCC then explored various potential options that would provide effective redress for consumers, and after careful consideration it was resolved to institute a public inquiry into the Vacation Ownership Industry, In terms of Section 88(3) of the CPA, bearing in mind the South African and international consumer protection-, legislative-, economic-, and structural contexts of the Industry.

The purpose of the inquiry is to identify the root causes of the issues experienced by consumers, make findings on the facts and evidence presented to the Panel of Inquiry, and make recommendations on how to address the consumer issues highlighted in the complaints.

Noting the nature of the issues that form the basis of this Inquiry, as well as the skills that are required for the successful carrying out of its mandate, I have authorised the appointment of a three-member Inquiry Panel who will lead the processes of the inquiry. The members are present here with us and are Ms Diane Terblanche who is an attorney with extensive experience in consumer protection law at all levels, policy development and advisory, legislative drafting, institutionalising and implementing policy and law, organisational and programme evaluation, governance adjudication and executive management. Ms Terblanche is also the chairperson of this panel.

The two other members are Mr Aubrey Ngcobo who is an admitted attorney specialising in property law for over 22 years, and Ms Zandile Mpungose who is also a very experienced attorney with extensive experience in contract management, policy development and strategy.

The panel will together with the NCC's technical task team conduct the inquiry over a period of six months across the length and breadth of the country, by engaging consumers , role players in the vacation ownership industry, regulators, academics, courts, tribunals and all other interested parties are relevant to find facts that will inform their report which will be submitted to me for endorsement.

In doing that they will gather evidence, statements, solicit information through questionnaires or surveys, produce documents, attend hearings, and participate in inspection in loco and other activities that are appropriate and necessary.

The aforesaid will be done to

- Establish the nature, characteristics and types of Vacation -, Timeshare and similar products and their associated services promoted and made available to South African consumers;

- Establish the basis upon which industry products and services are promoted and made available to South African consumers;

To establish the manner in and channels through which the promotion, rental, sale, swaps and all manner of making industry products and their associated services available to South African consumers;

To establish who the providers of the industry are and their inter-relationships (if any);

To establish the inventory of properties [points] in respect of which industry products / rights and their associated services are provided in and for;

To assess the pre-contractual disclosures provided to consumers in respect of contracts entered into in respect of industry products and rights, and their associated services;

To review the agreements ordinarily entered into between consumers and the industry providers and to determine the object(s) of the contracts, who the parties are to the agreements, the respective parties' rights and obligations and the applicable contract terms and conditions;

To ascertain the basis upon which prices, fees and levies are determined (e.g. does the grading of a particular club or resort have any effect on the price, levy or fee?); and for long term Vacation-, Timeshare products and rights whether there is provision for consultation with the consumers in respect of the general upkeep and maintenance of the properties (to keep them viable and valuable for the investors);

To determine the ownership and shareholding structures of properties in which Vacation- and Timeshare ownership and rights and other similar products and their associated services, rights are established;

To analyse and assess consumer complaints about the promotion, rental, sale, re-sale, swaps, occupation and all manner of making reservations for vacations.

- Review the laws, regulations, policies and codes applicable to the promotion, rental, sale, re-sale, swaps and all manner of making reservations for vacations.

- Identify the gaps, inadequacies or misalignment in the laws, regulations, policies and codes that possibly compromise regulation of the Industry including whether the current regulatory arrangements are effective in protecting consumers.

- And last but not least, make recommendations of the various options available to address the gaps, inadequacies, misalignment and inefficiencies in the laws, regulations, policies and codes regulating the Industry and improve the protection of consumers.

Upon conclusion or finalisation of the Inquiry process, the Panel will compile a written Report, setting out inter alia:

- Evidence on the nature of industry products and rights, similar products and their associated services and the �

- The regulatory regime governing VOI / Timeshare and other similar schemes in the country, setting out the advantages and disadvantages of the current regulation of timeshare;

- Establish which alternative regulations, laws, or other instruments might more effectively regulate the products and associated services;

- And make recommendations on specific features of the Vacation ownership products requiring dedicated regulation, or that could be considered for exemption from legislation / regulated in specific dedicated existing regulation.

A roadmap has been prepared with the panel in the form of a project plan. The processes include amongst others, visits to provinces, to consult different role players. This will include consumers who have filed complaints, interest groups as well as academics.

Once completed, the panel will submit a comprehensive report to me which I will assess and together with my team, make a determination on how to take the process forward. This could include a variety of recommendations to the Minister of Trade and Industry for certain legislative reforms.

In conclusion I wish the panel and the task team everything of the best, and trust that they will do a thorough job for the benefit of consumers.

I thank you.

Source: Republic of South Africa: Department of Government Communication and Information.