§ Mr. Michael Brown
To ask the Secretary of State for Trade and Industry whether the Government are yet in a position to respond to the recommendations for legislation in the Director General of Fair Trading's report on timeshare of July 1990.
§ Mr. Leigh
Yes. The report was commissioned by my predecessor because of the number of complaints which he received about the marketing and selling of timeshare. The director general was asked to review the adequacy of existing controls. I should like to record the Government's appreciation for the thoughtful and thorough analysis which his report contained.
Timeshare is making a valuable contribution to jobs and earnings in the tourism industry in the United Kingdom and in a number of other countries. The report does not question that many timeshare owners are satisfied with the product and the industry continues to grow. Its problems must therefore be kept in perspective.
The report confirms the Government's original view that much of the complaint and concern stems from dubious marketing practices and high-pressure selling. Although existing legislation provides a measure of protection, the Government consider that it is at the marketing and selling end of the transaction where increased controls are needed. The director general made three recommendations for changes to the Trade Descriptions Act 1968 to tighten the controls on statements about services and to bring timeshare award schemes within the Act's powers. The Government accept these recommendations in principle. The detail of their implementation will be dealt with as part of the general review of the Trade Descriptions Act currently being undertaken.
I am glad that the responsible majority of the industry has recognised that certain marketing practices are unacceptable. The Government welcome the formation of the new Timeshare Council which aims to represent all those with an interest in the industry, including owners. The council plans to develop a code of practice and has introduced membership criteria which seek to secure greater protection for buyers.
This is very much a step in the right direction, but these efforts need to be backed by legislative measures which would ensure that every purchaser received a prospectus giving certain minimum information about the development before signing a contract; a cooling-off period in which to cancel the contract without penalty; and protection of deposit moneys through a bonding or escrow 11W arrangement. These measures were recommended by the director general. Most of the timeshares which people in the United Kingdom buy are in developments abroad and most of the selling takes place abroad, too. Much of the activity is therefore outside United Kingdom jurisdiction. United Kingdom legislation would not, therefore, on its own provide effective protection, and could simply push the unscrupulous operator off-shore. For these reasons, this is an issue which can effectively be approached only on a European Community basis, and I shall be taking it up with the EC Commission. The Commission has already recognised the need for a cooling-off period for timeshare contracts in its recently issued proposal for a directive on unfair contract terms.
The measures that I have proposed are designed to ensure that anyone interested in buying a timeshare can make an informed and considered choice. I do not believe that it is necessary for Government to intervene further through legislation in the detail of timeshare contracts, for instance in relation to the holding of management fees or rental or resale moneys, as recommended by the director general. These recommendations represent good practice and I hope that the industry will follow them, but it is up to the consumer to make sure that the contract he signs includes sensible and reasonable terms on the future management and organisation of the development.