Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; alleged misrepresentation and Section 75 claim; alleged breach of Timeshare Regulations; alleged undisclosed commission complaint against Tandem Bank Limited (formerly Tandem Personal Loans Ltd)

Decision detail

Summary

Mr S purchased Fractional Club timeshare membership for £11,995 in February 2019 using a loan from Honeycomb Finance Ltd, which was later acquired by Tandem Bank Limited. Mr S complained that TBL should have accepted his Section 75 claim for misrepresentation and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974, citing alleged breaches of the Timeshare Regulations, pressure during the sales process, undisclosed commission, and insufficient information about ongoing costs. The ombudsman found that Section 75 claims face inherent difficulties when loans are assigned and that, while a breach of the Timeshare Regulations prohibition on marketing timeshares as investments was possible, it was not causative of Mr S's purchase decision, as evidence showed he was primarily motivated by holiday benefits. The ombudsman also found the commission of 2.5% was not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Section 75 claims face inherent difficulties when the original creditor (HF) assigned the loan to TBL, as case law indicates assignment does not necessarily transfer pre-assignment liabilities. Regarding Section 140A, the ombudsman concluded that while a breach of Regulation 14(3) of the Timeshare Regulations was possible, regulatory breaches do not automatically create unfairness. Crucially, the ombudsman found that the prospect of financial gain from the Allocated Property was not an important motivating factor in Mr S's purchase decision, as evidenced by the Supplier's sales notes showing Mr S was primarily interested in holiday benefits. The commission of 2.5% was not high enough to render the relationship unfair when compared to the Supreme Court's guidance in Hopcraft/Johnson/Wrench (which involved 55% commission). The ombudsman applied the causation principles from Carney and Kerrigan, finding that Mr S would likely have proceeded with the purchase regardless of any breach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website