News

Fractional ownership and timeshare operators in Australia are facing what they describe as an ''immediate and devastating'' threat, if they are forced to comply with new laws  banning commissions and other conflicts of interest in the financial advice industry.

The industry says it should not be included in the Australian government's proposed Future of Financial Advice reforms. The reforms would ban financial advisers from receiving conflicted forms of payment - including commissions and volume-based payments.

In Australia, fractional and timeshare products are regulated as managed investment schemes and timeshare operators are required to hold financial services licences. 

The sector is heavily reliant on commissions for sales staff but argues that it sells ''lifestyle products'', and should therefore be exempt from the new laws. It says its salespeople more closely resemble real estate or travel agents than financial advisers. 

Barry Robinson, chief executive of Wyndham Vacation Resorts said: ''Businesses in our industry have tried other remuneration structures, and they haven't worked.The way the legislation is worded, it doesn't matter if it's commissions or bonuses or any other incentive - they are basically banned under this legislation. For our sector it will be very detrimental.''

A spokeswoman for financial services minister Bill Shorten said: ''To the extent that the timeshare industry provide financial advice to retail clients, it is subject to the reforms,'' she said. ''The government is considering their concerns in order to determine whether any changes are necessary.''

11/01/12