Not upheld: section 75 connected lender liability for misrepresentation and breach of contract; section 140A unfair credit relationship; alleged breach of Timeshare Regulations Regulation 14(3) (marketing timeshare as investment) complaint against First Holiday Finance Limited

Decision detail

Summary

Mr A and Mrs A purchased Fractional Club timeshare membership in May 2016 for £13,866, financed by First Holiday Finance Limited. The membership included a share in an allocated property's net sale proceeds. In April 2025, they complained that the supplier misrepresented the product as an investment and breached contract when it underwent restructuring, and that the lender was party to an unfair credit relationship. They claimed the lender should pay their section 75 claim for misrepresentation and breach of contract. The ombudsman found no actionable misrepresentation (statements about property value were honestly held opinions, not false facts), no material breach of contract (Mr A and Mrs A remained members with continued holiday and property rights), and no unfair credit relationship (even if the supplier breached the Timeshare Regulations by marketing as an investment, Mr A and Mrs A provided no persuasive evidence this motivated their purchase). The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied section 75 of the Consumer Credit Act 1974 and section 140A unfair credit relationship provisions. On section 75, no actionable misrepresentation was found because: (1) telling prospective members they were buying a share in property was factually true; (2) opinions about property value appreciation were honestly held opinions, not false statements of fact; (3) no breach of contract was demonstrated as Mr A and Mrs A remained members, could still holiday, and retained entitlement to property sale proceeds; and (4) availability limitations were disclosed and Mr A and Mrs A regularly took holidays. On section 140A, the ombudsman considered whether a possible breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments) rendered the credit relationship unfair. While acknowledging the sales process left open the possibility of such a breach, the ombudsman found this was not determinative. Critically, Mr A and Mrs A provided no persuasive evidence that the prospect of financial gain was an important motivating factor in their purchase decision. Their account was described as 'bland' and 'generic' with no 'detail, sharpness or piquancy'. The ombudsman concluded they would have proceeded with the purchase regardless of any regulatory breach. Regarding information provision, even if the supplier failed to disclose ongoing costs adequately, Mr A and Mrs A did not demonstrate they would have acted differently with fuller disclosure. No unfair contract terms were operated unfairly in practice. No commission was paid, so disclosure would have made no difference.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website