Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation and breach of contract; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission payment complaint against Honeycomb Finance Limited

Decision detail

Summary

Mrs N purchased fractional club membership (a regulated timeshare product) in May 2018 for £17,433 financed by Honeycomb Finance Limited. Over six years later, in November 2024, she complained that the lender acted unfairly by rejecting her section 75 claim and by being party to an unfair credit relationship under section 140A of the Consumer Credit Act 1974. Her complaints included allegations that the supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, failed to disclose ongoing costs, and that the lender failed to disclose a commission payment of £435.82 to the supplier. The ombudsman found the section 75 claim was time-barred (made over 6 years after the purchase), that Mrs N's primary motivation was holiday accommodation rather than investment returns (so any regulatory breach was not material), that the commission was low at 2.3% of the charge for credit, and that the supplier owed no fiduciary duty to Mrs N. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A fairness, considering that regulatory breaches do not automatically render a credit relationship unfair. The key reasoning was: (1) the section 75 claim was time-barred under the Limitation Act 1980 (6-year limit from May 2018 to November 2024); (2) even if the supplier breached Regulation 14(3) by marketing as an investment, Mrs N's purchase motivation was primarily holiday accommodation, not financial gain, so any breach was not material to her decision; (3) the commission of 2.3% of charge for credit was low and would not have deterred the purchase had it been disclosed; (4) Mrs N was provided with pricing information and could compare options; (5) the supplier was not acting as Mrs N's agent or advisor but as seller of the timeshare product; (6) no fiduciary duty was owed by the supplier when acting as credit broker; (7) the burden was on Mrs N to prove factual allegations supporting unfairness, not on the lender to disprove them.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website