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; undisclosed commission arrangements complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr W complained that Clydesdale Financial Services Limited (trading as Barclays Partner Finance) acted unfairly by being party to an unfair credit relationship and by refusing to pay Section 75 claims regarding a £22,308 loan used to purchase a Fractional Club timeshare membership in January 2018. Mr W alleged the supplier misrepresented the membership as an investment in breach of the Timeshare Regulations and that the lender failed to disclose a commission arrangement. An investigator initially upheld the complaint, but the lender disagreed. The ombudsman found no actionable misrepresentation, concluded that any breach of the Timeshare Regulations was not material to Mr W's purchasing decision (which was motivated by holiday benefits rather than investment returns), and determined that the undisclosed commission (2.5% of the loan) was not disproportionately high. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier regarding guaranteed end dates or investment status. While acknowledging the possibility that the supplier breached Regulation 14(3) by marketing the membership as an investment, the ombudsman concluded this was not material to Mr W's purchasing decision, as his own testimony indicated he was motivated by improved holiday options and availability rather than investment returns. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles on commission disclosure, finding the commission amount (2.5% of loan) was not disproportionately high and would not have changed Mr W's decision had it been disclosed. The ombudsman found no evidence of pressure that significantly impaired Mr W's choice, noting he did not exercise his 14-day cooling-off right. 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