Timeshare revenues plummet as finance houses turn their backs
Industry in crisis
Many timeshare companies ignored protective consumer law enacted by Spain in 1999. During the following 16 years resorts continued to operate as they always had, cynically relying on daunting Spanish bureaucracy to protect them from legal consequences.
Tens, possibly hundreds of thousands of illegal contracts were written in this time period and timeshare customers lost huge amounts of money before the law finally caught up in 2015. In January of that year, the Spanish Supreme Court ordered Canary Island timeshare giant Anfi del Mar to pay €40,000 compensation to Norwegian former member Tove Grimsbo.
The floodgates opened and in the decade since, judges ordered timeshare companies to pay hundreds of millions of pounds to the people they mis-sold memberships to.
The financial aftermath caused new member timeshare sales throughout Spain to dry up to a trickle, with many former industry giants being forced into administration or liquidation.
Finance companies
In addition to taking money directly from holidaymakers lured from beachwalks of Spanish Costas and Islas, timeshare companies leveraged even greater sums by doing ‘sinister’ deals with loan companies like Shawbrook and Barclays Partner Finance.
Having onsite, instant availability to credit lines allowed timeshare sales people to not only target their quarry’s savings, it also enabled them to access money the beleaguered prospects didn’t currently have.
Now timeshare salespeople could clear out people’s bank accounts, and plunge them into life changing debt as well.
Often the same timeshare salesperson who sold the membership would be in charge of handling the loan application, and many members have reported the salesperson massaging the application form to ensure acceptance.
The credibility of a name like “Barclays” being associated with the timeshare operation often served to convince prospects that even operations accused of large scale mis-selling, such as Club la Costa were legitimate.
Questions have been raised as to whether it was appropriate for legitimate lenders to be enabling an industry with such a negative reputation.
Barclays Partner Finance/Azure- the turning point
In 2021, celebrated timeshare lawyer Adriana Stoyanova won a landmark battle against Barclays Partner Finance (BPF), forcing the loan providers to repay an astonishing £48 million to Azure victims.
This followed accusations against the Maltese timeshare operation of pressure selling, standard affordability checks being bypassed, memberships being illegally pitched as investments and loans being processed by incorrectly licensed timeshare sales staff.
Less than a year later a further £181 million was earmarked by BPF for payment to potential victims as the increased scale of abuse became clearer. It was a scandal the financing sector needed to distance itself from.
In the three years since, finance companies have backed away from existing relationships with European timeshare companies.
At the time of writing this article, to the best of our knowledge, there are no lending institutions still underwriting timeshare sales in Europe.
None.
Why not? Expert opinion
Greg Wilson, CEO of European Consumer Claims (ECC) the company at the forefront of the fight back against illegal behaviour in the timeshare industry, believes that the sector is just too toxic for finance companies to risk their reputation by aligning with.
“Finance companies and lending institutions are under the same pressure to maximise revenue as any other business,” notes Wilson. “Their previous collaborations have been extremely profitable for both sides. Companies throughout the European timeshare market have scrambled to form alliances with finance providers and many such partnerships existed.
“The types of loans provided were unsecured, owing to the fact that timeshare memberships have little or no resale value from the second that the contracts are signed. This meant that the loan interest had to be extremely high to justify the risk for the underwriters, and the timeshare purchaser often ended up paying double the initial price over the course of ten or more years.
“For example, a person who is sold a timeshare for £20,000 can end up paying £40,000 over the term of the loan. The timeshare itself is generally worthless and can’t be re-sold. In fact, in order to escape their contract (and associated financial obligations of annual fees), most people need expert help.
“To turn their backs on the timeshare revenue stream, finance companies would have to have had compelling reasons, and the reputational risk seems to have outweighed the enormous profits available.”
