Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 liability for timeshare purchase; undisclosed commission complaint against Clydesdale Financial Services Limited, trading as Barclays Partner Finance

Decision detail

Summary

Mr C and Mrs C complained that Clydesdale Financial Services Limited (trading as Barclays Partner Finance) acted unfairly by entering into an unfair credit relationship and refusing to pay a Section 75 claim relating to a timeshare purchase in October 2015. The ombudsman found that the credit agreement in question did not fund the timeshare purchase but rather refinanced existing debt with a third party, as evidenced by the credit amount matching the refinancing amount rather than the timeshare price. Applying the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission disclosure, the ombudsman found that the commission of 1.2% of the charge for credit was not sufficiently high to render the credit relationship unfair, and that the consumers would likely have proceeded with the refinancing regardless of commission disclosure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the credit agreement did not fund the timeshare purchase but rather refinanced Third Party debt, as evidenced by the credit amount matching the refinancing amount rather than the timeshare price. Therefore, the Lender could not be held responsible for the timeshare purchase under Section 75 of the CCA. Regarding the commission complaint under Section 140A, the ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, finding that the commission of 1.2% of the charge for credit was not high enough to render the credit relationship unfair, particularly given that Mr C and Mrs C were provided with cost information and would likely have proceeded with the refinancing regardless of commission disclosure. The ombudsman also found that the Supplier did not owe a fiduciary duty to Mr C and Mrs C when acting as a credit broker, and therefore remedies for secret commission were not available.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website