Not upheld: unfair credit relationships under section 140A of the Consumer Credit Act 1974; connected lender liability under section 75 of the Consumer Credit Act 1974; alleged breach of regulation 14(3) of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010; undisclosed commission payments complaint against Clydesdale Financial Services Limited, trading as Barclays Partner Finance

Decision detail

Summary

Mr A complained that Clydesdale Financial Services Limited (trading as Barclays Partner Finance) acted unfairly by being party to unfair credit relationships and by rejecting his section 75 claims for misrepresentation and breach of contract by a timeshare supplier. Mr A had financed three timeshare purchases between 2009 and 2013, with the 2013 purchase involving fractional club membership that included a share in an allocated property. The ombudsman found that section 75 claims relating to 2009 and 2010 purchases were time-barred under the Limitation Act 1980, and that the 2013 section 75 claim failed because no actionable misrepresentation or breach of contract was established. Regarding section 140A unfairness claims, the ombudsman acknowledged that the supplier may have breached the prohibition on marketing timeshares as investments, but found this was not determinative of unfairness because Mr A's own evidence showed he was not motivated by the prospect of financial gain. The ombudsman rejected arguments about inadequate affordability checks and undisclosed commission, finding the loan repayments were sustainable and commission payments were modest. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assessing fairness under section 140A, considering the supplier's commercial conduct, information provision, evidence of what was said at point of sale, inherent probabilities, and any existing unfairness. While acknowledging that a breach of regulation 14(3) (prohibition on marketing timeshares as investments) was possible, the ombudsman found this was not determinative of unfairness. The key finding was that Mr A's own evidence showed the prospect of financial gain was not an important motivating factor in his purchase decision - he stated he wanted the money returned and ease of booking, not profit. Therefore, even if regulation 14(3) was breached, it would not have caused him to make a different decision. The ombudsman rejected arguments about inadequate affordability checks, finding the loan repayments were sustainable from Mr A's income. Commission payments were found to be modest (5.88% of charge for credit) compared to the 55% in the Supreme Court's Johnson case, and Mr A had full information about the cost of credit. Section 75 claims relating to 2009 and 2010 purchases were time-barred under the Limitation Act 1980. The 2013 section 75 claim failed because no actionable misrepresentation or breach of contract was established.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website