Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged misrepresentation under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; alleged irresponsible lending; alleged undisclosed commission complaint against First Holiday Finance Ltd

Decision detail

Summary

Mr and Mrs M purchased Fractional Club timeshare membership in September 2016 for £13,633, financed by First Holiday Finance Ltd, which included a share in an Allocated Property's net sale proceeds. They complained that the supplier misrepresented the product, that the lender participated in an unfair credit relationship under Section 140A of the Consumer Credit Act 1974, and that the lender failed to pay a Section 75 claim. The ombudsman rejected all grounds, finding: (1) no actionable misrepresentation, as Mr and Mrs M provided insufficient evidence of false statements of fact and their own testimony showed they were motivated by holiday benefits, not investment returns; (2) no unfair credit relationship, as even if the supplier breached the prohibition on marketing timeshares as investments, Mr and Mrs M's evidence demonstrated they would have purchased regardless; and (3) no basis for a Section 75 claim, as no misrepresentation was established. The ombudsman also rejected allegations of undue pressure, irresponsible lending, and undisclosed commission as unsupported by credible evidence.

The Ombudsman's reasoning

The ombudsman applied the legal test for misrepresentation (untrue statement of existing fact that induced entry into contract) and found insufficient evidence of actionable misrepresentations. Regarding Section 140A unfairness, the ombudsman applied the Supreme Court's guidance in Plevin that regulatory breaches do not automatically create unfairness, and the courts' emphasis in Carney and Kerrigan on whether breaches materially impacted the debtor's decision to enter the agreement. The ombudsman found that even if the Supplier breached Regulation 14(3) by marketing the product as an investment, Mr and Mrs M's own evidence showed their purchase was motivated by holiday benefits, not financial gain, and they would have proceeded regardless. The ombudsman rejected allegations of undue pressure, irresponsible lending, and undisclosed commission as unsupported by credible evidence.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website