Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 claim for misrepresentation; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission arrangements complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mrs Y and Mr T purchased Fractional Club timeshare membership for £17,354 in March 2018, financed through a credit agreement with Barclays Partner Finance. They complained in November 2021 that the product was misrepresented as an investment in breach of Regulation 14(3) of the Timeshare Regulations and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found that while the product included an investment element (share in property proceeds), the evidence did not establish that this was a material factor in their purchasing decision, which appeared primarily motivated by holiday arrangements. The ombudsman also found that late evidence about investment motivation was unreliable due to timing and risk of influence from the Investigator's view and the Shawbrook judgment. Regarding commission, the ombudsman applied the Supreme Court's judgment in Hopcraft, Johnson and Wrench, finding no unfairness because the lender did not pay commission at the time of sale. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Fractional Club membership included an investment element, the Timeshare Regulations prohibited marketing it as an investment but did not ban such products entirely. Although there was competing evidence about whether the product was marketed as an investment in breach of Regulation 14(3), the ombudsman concluded that even if such a breach occurred, it was not material to Mrs Y's purchasing decision. The ombudsman found Mrs Y's late evidence about investment motivation to be unreliable, as it was provided after the Investigator's view and the Shawbrook judgment, creating a risk of influence. The ombudsman concluded that the primary motivation for purchase was holiday arrangements, not financial gain. Regarding commission, the ombudsman applied the Supreme Court's judgment in Hopcraft, Johnson and Wrench, finding that unlike Mr Johnson's case (55% commission), the lender did not pay commission at the time of sale, and there was no sufficiently extreme inequality of knowledge to render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website