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The investigation into irregularities in the holiday club industry, in particular that section of the industry which operates on a points system, has been completed and the consumer commission should at the end of this month submit an application against the points system clubs with the Consumer Tribunal, Adv. Anton Alberts, the FF Plus’ parliamentary spokesperson on trade and industry says.

The investigation is therefore not aimed at holiday time-share projects which sell real rights, such as those which have been sold in terms of the Sectional Titles Act where property rights are registered in the deeds office. The successful holiday time-share projects in South Africa where time-share ownership is based on a sectional title were excluded from the investigation.

Adv. Alberts says the deputy commissioner of the consumer tribunal, Thesi Mabusa, has confirmed that the application has already been served on to the points system clubs who, according to the Consumer Commission, is guilty of breaking the Consumer Protection Act.

When the tribunal receives the application by the end of the month, the case will be placed on the roll for final adjudication. The following aspects are involved:

1.       The perpetual nature of the contracts. The consumer commission wants the tribunal to find that all contracts that have a perpetual effect should be declared unreasonable and therefore should have no legal standing. The implication will then be that any member bound by such a contract will be able to decide to withdraw from the contract or will be able to continue with the relationship, but on a more equitable basis as approved by the consumer commission.

2.       Marketing practices such as aggressive marketing, undertakings and promises that cannot be fulfilled and any other undertakings that are not in line with the reality of the contracts and the products will be stopped by having it declared unacceptable practices.

3.       Thirdly, the tribunal has to make a finding about how members may withdraw from a legal contract. The consumer commission views the five days cooling-off period after contracting as insufficient and therefore wants the tribunal to make a finding with regards to the reasonable basis on which members may give notice to cancel the contract, taking into account a reasonable early cancellation fee as is currently the practice with fixed-term cellular phone contracts.

The jurisdiction problems with the court process will also be investigated because the points system clubs are suing club members for debts in areas where members are unable to go to, to defend him- or herself.

With regards to the code of conduct which has to be drawn up by the members of the industry, the process has already been started and according to Mabusa, the minister could possibly publish it in the government gazette next year for comments by the public.

Adv. Alberts says the investigation process has made it clear that the problems are mainly to be found with clubs who work on a points system only.

“The FF Plus wants to state it clearly that the investigation was started following complaints about the points based holiday clubs. The abuses and contravention of legislation are mainly to be found in that section of the industry and not in sectors where club members participate in a share block or sectional title scheme.

“Those sections appear to be reasonably free from problems and club members are asked not to willy-nilly distrust that part of the industry.

“The holiday club concept is legitimate and makes a welcome contribution to the economy. The mistakes in it should just be set straight for the industry to function optimally and a sensible secondary (second-hand) market could be developed and exist for people who want to sell their products,” Adv. Alberts says.

Issued by FF Plus