Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission arrangements complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr A, aged 79, purchased Fractional Club timeshare membership in April 2015 for £17,780 (financed at £8,069) through Clydesdale Financial Services Limited. The product included a share in an allocated property's net sale proceeds. Mr A's estate complained that the supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, and that the lender was party to an unfair credit relationship and wrongly refused Section 75 claims. An investigator upheld the complaint, but the ombudsman reversed this decision. The ombudsman found no actionable misrepresentation under Section 75 and concluded that even if the supplier breached Regulation 14(3), the credit relationship was not unfair under Section 140A because Mr A's purchase motivation was the apartment quality, not investment returns. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under Section 75 of the CCA. While the supplier may have positioned the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, this did not render the credit relationship unfair under Section 140A because Mr A's motivation for purchase was the quality of the apartment, not the prospect of financial gain. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission disclosure but found no evidence of undisclosed commission payments or commercial ties that would render the relationship unfair. Regulatory breaches do not automatically create unfairness under Section 140A; the consequences must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website