Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged misrepresentation of timeshare as investment; alleged irresponsible lending; alleged pressure; alleged unfair contract terms; alleged undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr D purchased Fractional Club timeshare membership on 27 June 2017 using finance from Barclays Partner Finance (BPF). In June 2021, through his professional representative, he complained that BPF was party to an unfair credit relationship under Section 140A of the Consumer Credit Act 1974, alleging misrepresentation (that the membership was marketed as an investment), irresponsible lending, pressure, unfair contract terms, and undisclosed commission. The ombudsman rejected all grounds of complaint. On misrepresentation, the ombudsman found insufficient evidence that the Supplier told Mr D the membership was an investment or guaranteed a specific sale date, and noted that Mr D's own evidence suggested his decision was driven by holiday rights for a wedding, not investment potential. On irresponsible lending, pressure, and unfair terms, the ombudsman found no credible evidence of detriment. On commission, applying the Supreme Court's Hopcraft, Johnson and Wrench framework, the ombudsman found the commission was substantially lower than the 55% in that case (typically under 7%) and that Mr D would have proceeded with the loan regardless of disclosure. The ombudsman concluded that regulatory breaches do not automatically render a credit relationship unfair under Section 140A and must be considered in the round with all circumstances.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the CCA, which requires consideration of whether a credit relationship is unfair to the debtor. The ombudsman examined five key areas: (1) the Supplier's commercial conduct and sales practices; (2) information provision; (3) commission arrangements; (4) evidence of what was said at the time of sale; and (5) inherent probabilities. On misrepresentation, the ombudsman found insufficient evidence that the Supplier told Mr D the membership was an investment or guaranteed a specific sale date. The ombudsman noted that including an investment element did not breach Regulation 14(3), which only prohibited marketing the contract 'as an investment'. Critically, the ombudsman found that Mr D's own evidence suggested his decision was driven by holiday rights for a wedding, not investment potential, meaning he would have proceeded regardless of any breach. On irresponsible lending, the ombudsman found no evidence the lending was unaffordable. On pressure, Mr D provided no credible explanation for not using the 14-day cooling-off period. On unfair terms, the PR failed to identify specific problematic terms or demonstrate detriment. On commission, the ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench framework, finding that: (1) the commission was significantly lower than the 55% in that case (typically under 7%); (2) the Supplier was not acting as Mr D's agent but as a seller; (3) no fiduciary duty was owed; and (4) Mr D would have proceeded with the loan regardless of disclosure. The ombudsman concluded that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with all circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website