Considered in Grand Committee
My Lords, I beg to move that the draft regulations, which were laid before the House on 22 October 2018, be considered.
These draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the work being done to adjust our existing legislative framework in readiness for leaving the European Union next year. Obviously, the best outcome for the UK is to leave the EU with a good deal. If a deal—and therefore a withdrawal agreement—is reached, the implementation date of this instrument could be changed by any subsequent Bill that the Government introduce to implement the withdrawal agreement into UK law. However, it is sensible to prepare for all scenarios, which is what we are doing in bringing this instrument before this Committee today
The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 transposed the 2008 EU directive on timeshare and long-term holiday products into UK law. The 2010 regulations improved consumer protection for those investing in timeshares across EEA states, aiming to improve consumer confidence in the industry. That was done through a number of new consumer rights and obligations on traders. Under the new rules, a consumer considering the purchase of a timeshare had always to be made aware of the key information in a standardised form in the language of the EEA state of which they were a national or resident. That new regime also extended consumer protections to a much broader range of holiday-related services, including resale, exchange and long-term holiday contracts, as well as timeshare contracts. These services are all characterised by long-term commitments of significant financial risks for consumers.
If approved, the regulations will make minor and technical amendments to the existing timeshare regulations to correct deficiencies that would arise from the United Kingdom’s withdrawal from the European Union. The draft regulations now put before the Committee make amendments to references to EEA states and language requirements. These include amendments which ensure that contracts governed by UK law are still protected when the UK is no longer a member state of the EEA. They widen the scope of the regulations so that certain contracts governed by the law of an EEA state will now be subject to the same regime as contracts governed by the law of third countries. In addition, language requirements are amended so that key information must be provided in English.
In practice, most of the protections of the timeshare regulations 2010 will continue as currently, except that some contracts applying the law of an EEA state will now be subject to the same requirements as contracts applying the law of a third country.
Principally, this instrument saves the current regulations, so that they remain the same for UK consumers buying timeshares and other long-term holiday products in the UK and from UK companies where contracts are governed by the law of the United Kingdom.
Where UK consumers buy certain timeshares and other long-term holiday products governed by the law of EEA states, these contracts will now be treated in the same way as contracts applying the law of a third country, as EEA states will now be third countries.
The new regime will generally not cover contracts where UK consumers purchase timeshares and other long-term holiday products from EEA traders when they are in that EEA state. These contracts will be generally be subject to the laws of that EEA state. As UK consumers will no longer be citizens of an EEA state, then that EEA state’s law may not apply in the same way to UK consumers as it did previously.
Additional amendments have been made to correct legal deficiencies and substitute references to the EEA, including EEA states. This will ensure legal operability of the legislation on day one of exit.
Finally, the regulations will include provisions for the contract and mandatory pre-contractual information to be provided in English, as well as allowing for them to be in another language, whether or not it is an official language of an EEA state.
A comprehensive assessment of the impact of the instrument has been undertaken. The conclusions were that as this instrument does not represent a substantial policy change, it is expected to result in little or no wider impacts or transfers. The instrument is also expected to have minimal effect on UK businesses, UK consumers, the wider UK society, the environment and the rest of the UK economy. This is because, as I said, the effect of these regulations for timeshare and other long-term holiday products will generally remain constant.
In conclusion, the regulations are a sensible and necessary use of the powers of the withdrawal Act that will ensure that our consumer law continues to function effectively on exit day, and I commend them to the Committee.
My Lords, this appears to be so uncontroversial that the noble Lord, Lord Foulkes, has left the room. However, I have a couple of questions. The Minister has done a great job in describing the limitations as well as the extent of this move. It is of course the limitations that concern me. One of the main ways in which timeshares, particularly non-British timeshares, are sold is in situ. In other words, people are sold to by people who literally come up to them in the street. It will not be clear to those individuals, who have been used to the process of being sold to and, in some cases, buying such products that the legal basis on which they are buying property will change. No longer will the contract be unified across the state. They will have bought a property in a foreign legal environment.
I make the same point as I made on the previous SI. That foreign legal environment will gradually diverge. It will diverge slowly or quickly, but it will change. It is clear that if that is how it goes, the Government and the industry have to work very hard to explain the legal complications that can arise from buying a property from a EU 27-based seller in an EU 27 country. It is not clear to me what is the legal redress if you buy a property from a UK-based seller in an EU 27 country. My suspicion is that it probably depends. That is another point on which serious information will be required to avoid people being mis-sold on that basis.
The Minister did not to any great extent address resale. Where does this leave the UK owner of an EU timeshare bought from an EU seller who comes to resell? It does not appear to me that this SI addresses this issue at all, but it is of great concern. Say the Minister had, in a fit of excitement, bought a timeshare on a golf course in the Algarve several years ago. He is shaking his head, but perhaps he should have done that—he would be relaxed. If he had bought that timeshare from a Portuguese seller, where does this leave him when it comes to the contract and process of resale? Where is the court of redress? Where is the process?
The SI is good as far as it goes, but it does not address the key consumer issues. Once again, it is consumers who will suffer. Whether we crash out or have a deal, the divergence will potentially create a significant downside for consumers. I would like to hear the Minister’s view on that.
My Lords, this is one of the more straightforward regulations. We can see that by the fact that we have lost my noble friend Lord Foulkes from our discussion. As was touched on, the main aim is to change references to “the EEA” to “the UK”, and similar changes in language from “official language of an EEA state” to “English”. At this stage, I cannot find much of substance to disagree with. However, I am sure my shadow BEIS colleagues may have some points to raise when this is discussed in the other place. Like my noble friend Lord Foulkes before me, I have just a couple of questions for the Minister.
First, much of the instrument deals only with replacing European references with domestic alternatives. However, the regulations will also ensure that contracts governed by the law of an EEA state will be treated in the same way as contracts governed by the law of non-EEA third countries. Did the Government consider any other option for EEA contracts?
Secondly, prior to the publication of this instrument, the Government chose not to carry out a consultation. This seems fair, considering the volume of secondary legislation and the relatively minor impact that this will have. However, it could be expected that the Government will have held informal conversations with those affected by the regulations. Will the Minister explain whether any such discussions, with industry or others, have taken place?
Thirdly, the Explanatory Memorandum claims that there is no impact on UK businesses. However, as a result of this instrument, businesses dealing with timeshares will surely have to acquaint themselves with the new regulations. Does the Minister not agree that, however minor, there will be some necessary adjustments for business to make?
Finally, on a similar note, does the Minister agree, like me, with the comments of his colleague the Secretary of State for Work and Pensions? This morning, she said that the UK will not be leaving on a no-deal Brexit as there is no majority in the other place for that to pass.
My Lords, I remind the noble Lord that we had a referendum a couple of years ago and we agreed that we were leaving the EU. That was the manifesto that both the party I represent and the noble Lord’s party went to the country on in 2017. We are leaving the EU. It depends on what terms. These regulations are about dealing with the question: what will happen if there is no deal? We hope there will be a deal but if there is no deal, we want to make sure that the proper protections are there.
The noble Lord, Lord Fox, asked a number of questions which went slightly wider than the regulations in front of us. The important thing to say to anyone who is thinking of buying a timeshare, whether in this country or another, is that whatever they do, they must take all the proper legal advice. I have no plans, when I walk round a golf course on the Algarve—which I have never done and have no intention of doing—to buy a timeshare, but there are people who want to buy timeshares and they serve a purpose. Whatever they do, the important thing is to make sure that they are getting the right advice, either in this country, if they are buying it here, or in another country. I think we would all agree on that point. Where people have had problems, it is very often because they have bought in the manner that the noble Lord, Lord Fox, seemed to be suggesting—someone comes up to them while they are on holiday and makes this suggestion.
Now that we are leaving, what protection will UK consumers have when buying timeshares in Portugal? Obviously, it will depend on where the consumer bought the timeshare. UK consumers who buy timeshares under UK law will be covered by the protections in the existing timeshare regime. If they are buying timeshares in Portugal from Portuguese traders, they will generally be subject to Portuguese law and the protections that that member state extends to non-EEA nationals. Consumers will be encouraged to understand the specific conditions of the contract and to take all appropriate advice.
The noble Lord also asked: how do we prevent people being misled? Obviously, I share his concern for vulnerable consumers who are unfairly targeted by manipulative and misleading sales tactics in many industries, but particularly here. I believe that the current timeshare regime, reviewed and updated by the 2010 regulations, provides adequate protections for timeshare consumers. The regulations require that clear and comprehensive information is provided to the consumer before any contract is agreed; that information on termination must also form part of the contract; that timeshare buyers also have the option to change their mind within two weeks of signing a contract, during which no money can be taken; and so on.
The noble Lord, Lord McNicol, asked whether it was possible that there would be further changes. He will be aware that the European Union (Withdrawal) Act does not give us the powers to create any legislation or substantially change any retained EU legislation. The changes that this instrument would bring into effect are made in exercise of those powers, to remedy deficiencies in retained law and not to change the effect of retained law. But we know that many people have concerns about some of the protections. I can give an assurance to the noble Lord that my right honourable friend and others will always keep these matters under review if we feel that there are not the appropriate protections. This will always be a concern. The Government would act if necessary.
I agree that resale is a vital point, because when one buys a timeshare one usually feels that one has an asset which, if it is to have value, should be able to be sold.
I was asked where the court of redress would be. If it was a Portuguese contract, the court of redress would be in the Portuguese courts. Perhaps I may double-check what the precise position would be in respect of something sold here that is in another place. If the noble Lord comes to a deal while sauntering around a golf course in the Algarve—so that is just a deal that he has made in Portugal—it is quite clear that the Portuguese courts will deal with it, but I had better write to the noble Lord on what the position would if he bought it here and it was in that EEA state to make sure that I get it absolutely correct.
I hope that that explanation is sufficient. As the noble Lord, Lord Fox, pointed out, the noble Lord, Lord Foulkes, has now felt that he can depart, so I hope that we can move on.