Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; undisclosed commission; alleged breach of Timeshare Regulations Regulation 14(3); irresponsible lending; pressure and misrepresentation complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr M purchased a Balkan Jewel timeshare membership for £6,600 in November 2014 using credit from the lender. The asset-backed timeshare included a share in property sale proceeds. In February 2017, Mr M complained that the supplier had misrepresented the product, pressured him into the purchase, failed to conduct proper affordability checks, and that the lender had failed to disclose commission payments and was party to an unfair credit relationship. The lender rejected the complaint, an FOS Investigator upheld it, but the ombudsman found no basis for the complaint. The ombudsman determined there were no actionable misrepresentations, the purchase was motivated by gold membership benefits rather than investment returns (making any regulatory breach immaterial), the commission of £145.20 was too small to render the relationship unfair, and Mr M would have proceeded with the purchase regardless of disclosure given his desire for the timeshare.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentations by the supplier regarding guaranteed end dates, release from existing memberships, guaranteed income, or gold membership availability. Regarding Section 140A unfairness, the ombudsman considered: (1) the supplier's sales practices and pressure claims were not sufficiently evidenced; (2) any potential breach of Regulation 14(3) regarding marketing as an investment was not material to Mr M's decision, as he was primarily motivated by gold membership benefits and increased holiday points (57% increase), not investment returns; (3) the commission of £145.20 (2.2% of loan, 2.9% of credit charge) was not high enough to render the relationship unfair, particularly when compared to the Supreme Court's guidance in Hopcraft, Johnson and Wrench where 55% commission was found unfair; (4) Mr M had adequate information about the cost of credit and could have compared alternatives; (5) regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round; (6) Mr M would have proceeded with the purchase even with full disclosure of commission given his desire for the timeshare and lack of alternative means to pay.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website