Not upheld: unfair credit relationship (Section 140A CCA), connected lender liability (Section 75 CCA), alleged misrepresentation and breach of contract by supplier, alleged breach of Timeshare Regulations 2010 complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mrs G purchased a Fractional Club timeshare membership for £9,700 in October 2014, financed by a credit agreement with Clydesdale Financial Services Limited. The membership included a share in net sale proceeds of an allocated property. In February 2017, Mrs G's professional representative complained that the supplier had misrepresented the product, breached contract, and that the lender had participated in an unfair credit relationship by marketing the timeshare as an investment in breach of Regulation 14(3) of the Timeshare Regulations. The representative also alleged inadequate affordability checks, pressure at point of sale, and undisclosed commission arrangements. The ombudsman found no actionable misrepresentation or breach of contract, and although a breach of Regulation 14(3) was possible, it was not causative of the purchase decision. The credit relationship was not unfair because Mrs G's primary motivation was the shortened membership term (not investment potential), the commission was low, and she would have proceeded regardless. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any breaches of regulations or misrepresentations actually motivated Mrs G's purchase decision. While acknowledging that the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, the ombudsman found this was not causative of the purchase because Mrs G's own contemporaneous letter of claim (which is more reliable than later statements) identified shortened membership term as the primary motivation, not investment potential. The ombudsman rejected the argument that regulatory breaches automatically create unfair credit relationships, citing Supreme Court authority (Plevin) requiring consideration of breaches 'in the round'. The commission amount was low (2.99% of charge for credit) compared to the 55% in the Johnson case, and Mrs G would have proceeded with the loan regardless of disclosure given her desire for the timeshare and lack of alternative funding. No fiduciary duty was owed by the supplier when acting as credit broker.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website