Not upheld: unfair credit relationship 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; irresponsible lending complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mrs C complained that Clydesdale Financial Services Limited acted unfairly by entering into an unfair credit relationship and rejecting her Section 75 claim regarding a £8,443 loan used to purchase Fractional Club timeshare membership in November 2013. The membership was asset-backed, offering a share in net sale proceeds of an allocated property. Mrs C alleged the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, that there were actionable misrepresentations, and that the lender failed to conduct proper affordability checks and failed to disclose commission payments. The ombudsman found that while a breach of Regulation 14(3) was possible, it was not material to the purchasing decision because Mrs C and Mr G were primarily motivated by increased holiday entitlement, as evidenced by their subsequent purchases and holiday usage. Mrs C's later testimony claiming investment motivation was undermined by inconsistencies, being raised for the first time 10 years after the sale and absent from the original complaint. The commission payment of £688.95 (8.16% of the loan) was low and did not create unfairness. No actionable misrepresentations were proven. The complaint was not upheld.

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 was not determinative of unfairness. The key issue was whether such a breach materially influenced Mrs C and Mr G's purchasing decision. The evidence showed they were primarily motivated by increased holiday entitlement (evidenced by their subsequent purchases and holiday usage), not by investment prospects. Mrs C's later testimony claiming investment motivation was undermined by inconsistencies: it was raised for the first time 10 years after the sale and was absent from the original complaint; her evidence was selective and contradicted by external facts (increased maintenance fees, further purchases); and the original complaint letter referenced the Timeshare Regulations but failed to allege a breach of Regulation 14(3). The commission payment was low (8.16% of loan amount) and did not create the extreme inequality of knowledge seen in the Supreme Court's Johnson case (55% commission). The lender's affordability checks were not shown to be inadequate, and the lending was not demonstrated to be unaffordable. No actionable misrepresentation was proven regarding guaranteed end dates, exclusivity, or exit mechanisms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website