Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claim 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 complaint against First Holiday Finance Ltd

Decision detail

Summary

Mr A and Miss W purchased Fractional Club timeshare membership in October 2016, financed by a credit agreement with First Holiday Finance Ltd. In July 2023, they complained that the Supplier had misrepresented the membership as an investment in breach of the Timeshare Regulations and that the Lender was party to an unfair credit relationship. The ombudsman found the Section 75 misrepresentation claim was time-barred under the six-year limitation period. Regarding Section 140A unfairness, the ombudsman concluded that even if the Supplier had breached Regulation 14(3) by marketing the product as an investment, this would not have rendered the credit relationship unfair because the evidence showed Mr A and Miss W were primarily motivated by holiday benefits (they had previously purchased a trial membership and the sales note indicated they liked the choice of destinations), not investment returns. The ombudsman found the witness statement unreliable due to significant inconsistencies with contemporaneous evidence. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. First, regarding Section 75 misrepresentation claims, the six-year limitation period under the Limitation Act 1980 had expired when the complaint was made in July 2023 (more than six years after October 2016), making it fair for the Lender to reject the claim. Second, regarding Section 140A unfairness, the ombudsman found no breach of Regulation 14(3) of the Timeshare Regulations was determinative without considering impact on the complainants. The ombudsman assessed whether any alleged breach (marketing as investment) materially influenced the purchase decision. Finding that Mr A and Miss W were primarily motivated by holiday benefits (evidenced by their prior trial membership and the sales note indicating they liked the choice of destinations), the ombudsman concluded that even if a breach occurred, it would not have altered their purchasing decision. The ombudsman also found the witness statement unreliable due to significant inconsistencies with contemporaneous evidence, particularly regarding post-sale events and the timing of holidays. Regarding commission, the ombudsman applied the Supreme Court's Hopcraft principles and found no undisclosed commission was paid, and the Lender-Supplier relationship did not render the credit relationship unfair given the circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website