Not upheld: Goods and services under S75 complaint against Tandem Bank Limited

Decision detail

Summary

X purchased Fractional Club timeshare membership for £23,012 on 18 June 2019, financed by a £21,190 loan from Tandem Personal Loans Ltd. X complained that the Supplier misrepresented the product as an investment with guaranteed returns, that the Lender failed to conduct proper affordability checks, and that the Lender was party to an unfair credit relationship due to undisclosed commission arrangements. The ombudsman found no actionable misrepresentation or breach of contract by the Supplier, and concluded that even if the Supplier had breached the prohibition on marketing timeshares as investments, this was not material to X's decision-making given that his share in the allocated property actually decreased. The ombudsman also found that the £529.75 commission (2.5% of the loan) was not disproportionate and would not have affected X's borrowing decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-stage analysis under Section 75 and Section 140A of the Consumer Credit Act 1974. For Section 75 claims, the ombudsman found no actionable misrepresentation by the Supplier regarding the guaranteed end date, real property interest, or investment nature of the product. The ombudsman also found no breach of contract regarding holiday availability, as the Purchase Agreement made clear that availability was subject to demand and X had made successful bookings. For Section 140A, the ombudsman examined whether the credit relationship was unfair by considering: (1) the Supplier's commercial conduct and sales practices; (2) information provision and contractual documentation; (3) evidence of what was said at the Time of Sale; and (4) inherent probabilities. While accepting the possibility that the Supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, the ombudsman found this was not material to X's decision-making. The ombudsman noted that X's share in the allocated property actually decreased (from 1.84% to 0.98%), making it unlikely he was motivated primarily by investment returns. Regarding commission disclosure, the ombudsman found the £529.75 commission (2.5% of amount borrowed) was not disproportionate and that X would have proceeded with the loan regardless of disclosure. The ombudsman applied the principles from the Supreme Court judgment in Hopcraft, Johnson and Wrench, finding no evidence of undisclosed contractual or commercial ties between the Lender and Supplier, no evidence that the Supplier acted as an advisor to X, and no other conflict of interest. The ombudsman placed the burden on X to prove factual allegations to the civil standard, citing Promontoria (Henrico) Ltd v. Gurcharn Samra.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website