Not upheld: unfair credit relationship under section 140A CCA; section 75 CCA liability; alleged breach of Timeshare Regulations Regulation 14(3); undisclosed commission complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr R and Mrs R purchased Fractional Club timeshare membership in October 2016 for £14,431 financed through a credit agreement with Barclays Partner Finance. The membership included a share in an allocated property's net sale proceeds. Mr R's professional representative complained that the lender acted unfairly by being party to an unfair credit relationship under section 140A of the Consumer Credit Act 1974 and by rejecting a section 75 claim. The representative alleged the product was marketed as an investment in breach of Timeshare Regulations and that commission was undisclosed. The ombudsman found that Mr R and Mrs R's own evidence showed they were motivated by holiday benefits and the normal operation of the agreement (receiving a lump sum at the end), not by investment considerations. The commission of 2.5% was low and would not have deterred the purchase. The ombudsman concluded the credit relationship was not unfair and the section 75 claim was properly rejected.

The Ombudsman's reasoning

The ombudsman found that while the Fractional Club membership included an investment element (share in property), the evidence did not demonstrate that Mr R and Mrs R were induced to purchase based on the prospect of financial gain in breach of Regulation 14(3) of the Timeshare Regulations. Their statement indicated they were motivated by holiday benefits and the normal operation of the agreement (receiving a lump sum at the end), not by investment considerations. The commission of 2.5% was low compared to the Johnson case (55%) and would not have deterred the purchase. The supplier did not owe a fiduciary duty to Mr R, and regulatory breaches do not automatically render a credit relationship unfair under section 140A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website