Selling - Timeshare – Finance
When buying a timeshare some consumers have a need to take out a loan, whilst others pay for the timeshare from their own funds. Equally, some pay part by credit and part by their own funds. In this article, we are dealing with consumers who are sold loans and timeshare in the same sales event.
Finance companies have financial products to sell. When in the confines of a sale, it stands to reason that the first and principle contract entered was that of the provision of finance, as without that finance the consumer could not acquire the timeshare product. Therefore, the sale of the timeshare contract only came into existence because of the provision of finance offered in the finance contract.
The interesting feature in the sale of timeshares is that both contracts are discussed, offered and sold by the same representative and when sold the finance company pay the seller a fee for selling the bank's product.
Accordingly, the salesperson is employed by both the bank and the timeshare seller and the transactions are linked.
Sales of finance and timeshare products are termed regulated business within Finance under Regulated Activities Order 2001 and the timeshare, via the Timeshare and Long-Term Holiday Products Regulations 2010.
When selling finance those who sell it, should be regulated (including their agents and servants). If they are not regulated and you were sold a loan by an unregulated seller, they have acted contrary to the Financial Conduct Authority.
It is the responsibility of the lender to establish whether its proposed business and its activities require authorisation to carry out regulated activities and if authorisation has not been applied for or granted they have mis-sold the finance and will be disciplined by the FCA.
If the seller of finance is in any doubt about whether it is carrying out regulated activities they are required to make enquiries for themselves, and should permission be required, they too must be regulated.
For guidance on activities which are regulated and when you may require authorisation, see Perimeter Guidance Manual.
Consumer credit activities are:
- Entering into a regulated credit agreement as the lender
- Exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement
- Credit broking
- Debt collecting
- Providing credit information services
- Providing credit references
- Operating an electronic system in relation to lending
- Designated investment business
- Advising on investments (except pension transfers/opt-outs)
- Advising on P2P (peer-to-peer) agreements
- Arranging (bringing about) deals in investments
- Making arrangements with a view to transactions in investments
- Dealing in investments as an agent
- Dealing in investments as a principal
- Managing investments
- Electronic money
- Issuing electronic money
As a lender supporting timeshare purchases, you need to be regulated.