Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; rejection of section 75 claim; alleged misrepresentation and breach of regulation 14(3) of the Timeshare Regulations complaint against First Holiday Finance Ltd

Decision detail

Summary

Mr and Mrs C purchased Fractional Club timeshare membership in August 2014 for £11,426, financed by a £10,926 loan from First Holiday Finance Ltd. The membership included a share in net proceeds from the sale of an allocated property after 19 years. In February 2024, approximately 9.5 years after purchase, they complained that the Lender had acted unfairly by rejecting their section 75 claim and by being party to an unfair credit relationship under section 140A of the Consumer Credit Act 1974. They alleged the Supplier had misrepresented the product as an investment and that the Lender had failed to conduct proper affordability checks. The ombudsman found the section 75 claim was time-barred under the Limitation Act 1980 and rejected the section 140A claim on the grounds that there was insufficient evidence of actionable misrepresentation, that any possible breach of regulation 14(3) of the Timeshare Regulations was not causative of the purchase decision, and that the Supplier was independent and impartial. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment of the credit relationship under section 140A, considering the Supplier's commercial conduct, information provision, sales practices, and any regulatory breaches. While acknowledging that a possible breach of regulation 14(3) of the Timeshare Regulations existed (marketing as an investment), the ombudsman found this was not causative of the purchase decision because Mr and Mrs C's witness statement made no mention of expecting to make a profit and the prospect of financial gain was not an important motivating factor. The ombudsman rejected allegations of fraudulent misrepresentation, finding that statements about receiving a share of net proceeds were not false statements of fact but honestly held opinions, and that Mr and Mrs C provided insufficient evidence of what was actually said. The ombudsman found the Supplier was independent and impartial under FCA guidance, that the APR of 16.6% was not unusual or excessive, and that Mr and Mrs C had genuine choices (not to purchase, to cancel within the cooling-off period, or to seek alternative financing). The ombudsman applied the principle from Plevin that regulatory breaches do not automatically create unfairness and must be assessed for their impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website