Not upheld: unfair credit relationship; potential breach of Timeshare Regulations; undisclosed commission and group relationship complaint against First Holiday Finance Ltd

Decision detail

Summary

Mrs B and Mr B purchased Fractional Club timeshare membership in April 2016, financing £6,939 through First Holiday Finance Ltd. In 2024, they complained that the Lender participated in an unfair credit relationship under Section 140A of the Consumer Credit Act 1974, arguing the Supplier had breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment. The ombudsman found that even if such a breach occurred, it did not render the credit relationship unfair because Mrs B and Mr B's purchase decision was not motivated by investment prospects, as evidenced by their failure to mention this in their 2021 complaint. The ombudsman also distinguished the case from recent Supreme Court precedent on commission-based unfairness, noting the Lender paid no commission to the Supplier. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that even if the Supplier had breached Regulation 14(3) by marketing the Fractional Club as an investment, this did not render the credit relationship unfair. The key reasoning was that Mrs B and Mr B's purchase decision was not motivated by the prospect of financial gain. The ombudsman found their testimony unreliable because they made no mention of the investment aspect in their 2021 complaint, only raising it after the Shawbrook & BPF v FOS judgment. The ombudsman also found that the Lender did not pay commission to the Supplier at the Time of Sale, distinguishing the case from the Supreme Court's decision in Hopcraft, Johnson and Wrench. The undisclosed group relationship between the Lender and Supplier, while potentially a disclosure failing, did not render the credit relationship unfair given that the Lender provided loans to customers outside the Supplier's external partners' lending terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website