1. ATHOC Annual Conference 2017
Key issues likely to be implemented by ASIC from their review of sunsetting clauses in the RG 160 timeshare policy
Tim Wiedman
Partner

2. Background
Various class orders relied upon by timeshare industry, including for loose-leaf price lists/cooling-off, property valuations and forfeited interests
Class orders cease or sunset after 10 years
ASIC looking to remake class orders as legislative instrument
ASIC taking opportunity to update ASIC’s timeshare policy in Regulatory Guide 160
Impact for both AFS licensees (responsible entities and dealers) and ‘grandfathered’ or exempt operators
ASIC issued Consultation Paper in 272 in November 2016
Scheduled to release updated policy in March 2017
Policy update delayed and ongoing – class orders reissued as legislative instruments or extended

3. Status quo

4. Property valuations, loose-leaf price list, forfeited interests and rental pools
Relief to continue for:
property valuations – responsible entities being exempt from requirement to regularly value scheme property
use of loose-leaf price list – relief from the requirement for scheme constitutions to specify the issue price of interests, subject to cooling-off rights and other conditions
acquisition and sale of forfeited interests
rental pools (for existing operators and amendment to only require annual audit of trust account)

5. Cooling-off

6. Cooling-off ASIC considering other options
status quo – 7 day cooling-off period/14 days for non-ATHOC members
longer cooling-off period
tailored cooling-off period
opt-in
Only retain record of cooling-off statements for consumers who purchase
Oral explanation of cooling-off rights
Signed cooling-off acknowledgment
Exercise of cooling-off rights

7. Fees and costs disclosure

8. Fees and costs disclosure
ASIC proposing tailored fees and costs disclosure regime for timeshare schemes (including removing consumer advisory warning)
Regime to comprise
prices template
levies template
other fees and costs template
example of annual costs
Concerns
disclosure of price and costs bundled together
inclusion of finance costs
example of annual costs – over 10 year period

9. Financial requirements

10. Financial requirements – net tangible assets (NTA)
Extend definition of ‘special custody assets’ to cover
interests in real property (e.g. leases)
interests in other timeshare schemes
Audit timeshare levies trust account
reduce from twice annually to annually
Proposed - audit of ‘points’
annual audit to include audit of points for points-based timesharing schemes

11. ‘Grandfathered’ schemes

12. ‘Grandfathered’ schemes
‘Grandfathered’ or exempt schemes include
timesharing schemes exempt under state law (PF 205)
member-controlled clubs (PF 206)
title-based timesharing schemes (PF 207)
Future relief on case-by-case basis
Propose to offer existing exempt PF 206 and 207 operators amendments to existing relief
increase voting and ownership restrictions from 10% to 20% subject to conditions
restriction on member voting where member is operator, manager, promoter, developer or an associate of them, and has an interest in a resolution other than in their capacity as a member
reduce frequency of trust account audit from twice a year to once a year (PF 206 only)

13. On the horizon

14. What’s on ASIC’s radar PDS content Marketing and promotional material
Best interests duty
Training requirements for sales personnel

15. Questions?

16. Contact Tim Wiedman Partner T +61 7 3233 8716E
Disclaimer: This presentation covers legal and technical issues in a general way.  It is not designed to express opinions on specific cases.  This presentation is intended for information purposes only and should not be regarded as legal advice.  Further advice should be obtained before taking action on any issue dealt with in this presentation.