Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claims for misrepresentation and breach of contract; alleged breach of regulation 14(3) of the Timeshare Regulations 2010; undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mrs A purchased fractional timeshare membership in 2011 financed by two credit agreements totalling approximately £41,500. She alleged the supplier misrepresented the product as an investment and that the lender failed to conduct proper affordability checks and was party to an unfair credit relationship. The ombudsman rejected all grounds of complaint. While acknowledging that the supplier may have breached the prohibition on marketing timeshares as investments, the ombudsman found this was not determinative because Mrs A's own evidence showed she was motivated by recovering her capital rather than making a profit. The ombudsman found the lending was affordable based on Mrs A's income and mortgage-free status, and that the commission amounts were modest. The ombudsman concluded the credit relationship was not unfair to Mrs A under section 140A of the Consumer Credit Act 1974.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A, examining the supplier's commercial conduct, information provision, evidence of what was said at sale, and inherent probabilities. While acknowledging that a breach of regulation 14(3) was possible, the ombudsman found this was not determinative. The key finding was that Mrs A's purchase was not motivated by the prospect of financial gain from the property share, as evidenced by her own statements that she was seeking to recover her money rather than make a profit. The ombudsman rejected allegations of fraudulent misrepresentation, finding no false statements of existing fact. Regarding affordability, the ombudsman found the loan repayments sustainable from Mrs A's income without resort to savings. The commission amounts were low (3.98-6.74%) compared to the Supreme Court's concerns in Johnson, and Mrs A had adequate price information to compare options. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationship unfair given Mrs A's actual motivations and circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website