Not upheld: unfair credit relationship under Section 140A CCA; Section 75 liability for misrepresentation; alleged breach of Timeshare Regulations; undisclosed commission; irresponsible lending complaint against Honeycomb Finance Limited

Decision detail

Summary

Mrs P complained that Honeycomb Finance Limited acted unfairly by being party to an unfair credit relationship and by refusing to pay a Section 75 claim against the timeshare supplier. Mrs P had purchased a Fractional Club timeshare membership in April 2019 for £19,886, financed by a £23,653 loan. She alleged the supplier misrepresented the membership as an investment that would appreciate in value and provide guaranteed holiday access. The ombudsman found no actionable misrepresentation and, while acknowledging the supplier may have breached the Timeshare Regulations by marketing the membership as an investment, concluded this did not render the credit relationship unfair because Mrs P's primary motivation was the holiday aspect. The ombudsman also found the undisclosed commission of £591.33 (1.2% of credit charge) was too low to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the CCA and Section 75 of the CCA to assess fairness. On Section 75, the ombudsman found no actionable misrepresentation by the supplier regarding investment value, property appreciation, or holiday access. On Section 140A, the ombudsman considered whether the credit relationship was unfair, examining the supplier's sales practices, information provision, and commission arrangements. While acknowledging the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, the ombudsman found this did not render the credit relationship unfair because Mrs P's primary motivation was the holiday aspect, not financial gain. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, finding the commission was low (1.2% of charge for credit) and would not have deterred Mrs P from taking the loan. The ombudsman rejected arguments about affordability, unauthorised brokers, unfair contract terms, and pressure during the sales process due to insufficient evidence of actual detriment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website