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 Regulations; undisclosed commission payments complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr S complained that Clydesdale Financial Services Limited (trading as Barclays Partner Finance) acted unfairly by being party to unfair credit relationships and by rejecting Section 75 claims for misrepresentation and breach of contract relating to two timeshare purchases financed in 2015 and 2017. The ombudsman found that while the timeshare supplier may have breached regulations by marketing the asset-backed Signature Collection membership as an investment, the evidence demonstrated Mr S' primary motivation was access to luxury holiday accommodation, not investment returns. The modest commission payments (2.5% of amounts borrowed) and absence of fiduciary duty owed by the supplier meant the credit relationships were not unfair under Section 140A. The ombudsman concluded that regulatory breaches do not automatically render credit relationships unfair; their impact must be assessed holistically considering whether they materially influenced the consumer's decision-making, and found no basis to uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this breach was not causative of Mr S' decision to purchase. The evidence, including Mr S' own testimony and contemporaneous sales notes, consistently indicated that his primary motivation was access to luxury holiday accommodation, not investment returns. The ombudsman applied the principle established in case law that regulatory breaches do not automatically render credit relationships unfair under Section 140A; the impact of such breaches must be considered in the round. The commission payments were modest (2.5% of amounts borrowed), significantly lower than the 55% commission in the Supreme Court's Johnson case, and would not have dissuaded Mr S from proceeding. The ombudsman found no evidence of fiduciary duty owed by the supplier as credit broker, no evidence of pressure or impaired choice, and no evidence that Mr S would have made different decisions had there been fuller disclosure of commission or regulatory compliance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website