Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; alleged breach of Regulation 12 of the Timeshare Regulations complaint against First Holiday Finance Limited

Decision detail

Summary

Mrs S purchased Fractional Club timeshare membership in April 2012 for £7,021, financed by a £6,521 credit agreement with First Holiday Finance Limited. The membership included a share in net sale proceeds of an allocated property. In February 2024, over 11 years later, Mrs S complained that the Lender acted unfairly by rejecting her Section 75 claims for misrepresentation and by participating in an unfair credit relationship under Section 140A. She alleged the Supplier breached Regulation 14(3) by marketing the timeshare as an investment, failed to provide adequate information under Regulation 12, and that undisclosed commission arrangements rendered the relationship unfair. The ombudsman found the Section 75 claim time-barred under the Limitation Act 1980 and rejected the Section 140A unfair relationship claim, finding that even if regulatory breaches occurred, they would not have materially influenced Mrs S's decision to purchase, as her primary motivation was holiday accommodation rather than investment returns. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. First, regarding Section 75 claims for misrepresentation, the ombudsman found the claim was time-barred under the Limitation Act 1980 as more than six years had passed since the time of sale (12 April 2012) to when the claim was first made (15 February 2024). Section 32 concealment provisions did not apply as there was insufficient evidence of deliberate concealment. Second, regarding Section 140A unfair credit relationship claims, the ombudsman considered whether a potential breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments) rendered the relationship unfair. The ombudsman found that even if such a breach occurred, it would not have been material to Mrs S's decision to purchase because: (a) the evidence showed her primary motivation was holiday accommodation availability, not investment returns; (b) she sought to dispose of the membership as early as 2013, suggesting she did not value the investment element; (c) her witness statement was insufficiently detailed to establish investment motivation; and (d) regulatory breaches do not automatically create unfairness under Section 140A—the impact on the consumer must be considered holistically. Third, regarding commission arrangements, the ombudsman found no commission was paid by the Lender to the Supplier at the time of sale, distinguishing this case from the Supreme Court's Hopcraft, Johnson and Wrench precedent. Fourth, regarding information provision failures, the ombudsman found that even if the Supplier failed to provide adequate information about ongoing costs or property valuation under Regulation 12, this would not have changed Mrs S's purchasing decision given that investment returns were not her motivating factor.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website