Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation and breach of contract; undisclosed commission complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr and Mrs W purchased Signature Collection timeshare membership financed by a credit agreement with Clydesdale Financial Services Limited (trading as Barclays Partner Finance) in April 2016. In December 2021, through a professional representative, Mr W complained that the lender acted unfairly by being party to an unfair credit relationship and by rejecting a Section 75 claim. The complaint alleged misrepresentation regarding guaranteed end dates and investment characterization, breach of contract due to holiday availability restrictions and supplier liquidation, breach of Timeshare Regulations regarding investment marketing, insufficient information provision, and undisclosed commission. The ombudsman found no actionable misrepresentation as the investment element was inherent to the product, no breach of contract as membership rights remained intact, and no unfair credit relationship as the consumers' purchase motivation was not investment-driven and no commission was paid by the lender to the supplier. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding guaranteed end dates or investment characterization, as the share in the allocated property was inherently an investment. Regarding breach of contract, the ombudsman found no evidence that Mr and Mrs W could no longer use their membership or were denied their share in property proceeds. On the unfair credit relationship claim, the ombudsman found that even if the supplier breached Regulation 14(3) by marketing the product as an investment, Mr and Mrs W's own statements indicated their purchase was not motivated by prospect of financial gain but rather by the capital return possibility. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles on commission but found no evidence of contractual or commercial ties between lender and supplier that were improperly disclosed, and crucially, no commission was paid by the lender to the supplier at the time of sale. Regulatory breaches do not automatically render credit relationships unfair; the consequences must be considered holistically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website