Not upheld: unfair credit relationship under Section 140A of Consumer Credit Act 1974; connected lender liability under Section 75; alleged breach of Regulation 14(3) of Timeshare Regulations; alleged irresponsible lending; alleged unfair contract terms complaint against First Holiday Finance Ltd

Decision detail

Summary

Mrs B and Mr B purchased Fractional Club timeshare membership for £16,849 in February 2018, financed by a £16,349 loan from First Holiday Finance Ltd. In February 2025, approximately 7 years later, they complained that the lender was party to an unfair credit relationship and rejected their Section 75 claim, alleging the product was misrepresented as an investment in breach of Timeshare Regulations, that insufficient information was provided about ongoing costs, and that unfair contract terms existed. The ombudsman found that while a breach of the investment marketing prohibition was possible, the complainants' own evidence (a statement produced 7 years after purchase and after relevant case law) indicated they were motivated by the asset-backed nature of the product rather than investment returns. The ombudsman found the lending was affordable, no evidence of unfair contract term operation, and no evidence of high-pressure sales, and therefore concluded the credit relationship was not unfair and the complaint should not be upheld.

The Ombudsman's reasoning

The ombudsman considered whether the credit relationship was unfair under Section 140A by examining: the supplier's sales and marketing practices; information provision; commission arrangements; evidence of what was said at sale; and inherent probabilities. While accepting it was possible the supplier breached Regulation 14(3) by marketing the product as an investment, the ombudsman found that Mrs B and Mr B's own evidence (statement from 7 years later, produced after relevant case law) did not persuade that the investment element motivated their purchase decision. The statement spoke of 'recovering costs' rather than profit, and appeared to describe the asset-backed nature rather than investment motivation. The ombudsman found the lending was affordable, no evidence of unfair contract term operation, no evidence of high-pressure sales preventing free choice, and no evidence the supplier's status affected the membership. Therefore, no unfair credit relationship was established.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website