Not upheld: section 75 claims (misrepresentation and breach of contract); unfair credit relationship under section 140A; irresponsible lending; undisclosed commission; potential breach of timeshare regulations complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr C purchased fractional club membership (a regulated timeshare contract) for £12,000 in October 2014, financing £7,000 through the lender. The membership included a share in net sale proceeds of an allocated property. Mr C later complained that the supplier misrepresented the membership and that the lender participated in an unfair credit relationship. The original complaint (February 2017) alleged misrepresentation, breach of contract, irresponsible lending, and undisclosed commission. A later undated letter from Mrs C (provided December 2023) alleged the membership was sold as an investment in breach of timeshare regulations. The ombudsman found no actionable misrepresentation because the documentation clearly disclosed the terms and the supplier made no false statements of fact. On the unfair credit relationship claim, the ombudsman found that while the supplier's conduct is attributable to the lender under section 56 of the CCA, regulatory breaches do not automatically create unfairness. The ombudsman found Mr C's motivations were the shorter membership term and fee savings, not investment returns, based on the original letter of complaint which was more reliable than later undated testimony. The low commission (£154, representing 2.99% of the charge for credit) and Mr C's clear desire for the membership meant the credit relationship was not unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 75 of the CCA and found no actionable misrepresentation because: (1) the documentation clearly showed the sale date was 'proposed' not guaranteed; (2) the property was specifically named and the share in net proceeds was clearly described; (3) the savings claim was factually true given the shorter membership term. On section 140A unfair credit relationship, the ombudsman found: (1) the supplier's conduct during antecedent negotiations is attributable to the lender under section 56; (2) however, regulatory breaches do not automatically create unfairness under section 140A - the impact on the debtor must be considered; (3) the original letter of complaint (made closer to the time of sale) did not allege investment-related misrepresentation, whereas the later undated letter from Mrs C lacked credibility and detail; (4) Mr C's own stated motivations were the shorter term and savings on management fees, not investment returns; (5) the commission of £154 (2.99% of charge for credit) was not high enough to render the relationship unfair, especially given Mr C wanted the membership and had no other means to pay; (6) even if regulation 14(3) of the Timeshare Regulations was breached (marketing as investment), this would not have caused Mr C to make a different decision given his stated motivations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website