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; undisclosed commission; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010 complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr L and Mrs L purchased Fractional Club timeshare membership in September 2013, financed by a credit agreement of £10,512.95 from Clydesdale Financial Services Limited (trading as Barclays Partner Finance). The Fractional Club provided holiday rights and a share in net sale proceeds of an allocated property. In February 2017, Mr L raised complaints that the Supplier misrepresented the product as an investment, that the Lender failed to conduct proper affordability checks, and that the Lender wrongfully rejected Section 75 claims for misrepresentation and breach of contract. The ombudsman found no evidence of actionable misrepresentation, as Mr L provided no statement or evidence showing his purchase was motivated by the prospect of financial gain. Although the Supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, this breach was not causative of the purchase decision and therefore did not render the credit relationship unfair under Section 140A. The undisclosed commission of £862.06 was modest compared to comparable cases and did not create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A unfairness, finding that regulatory breaches do not automatically create unfairness but must be considered in the round with their actual impact on the consumer. The key finding was that Mr L's purchase decision was not motivated by the prospect of financial gain from the investment element, despite the possible breach of Regulation 14(3). The commission arrangement, while possibly undisclosed, was modest (5.59% of charge for credit) compared to the 55% in the Johnson case, and Mr L had sufficient information about the cost of credit to make an informed decision. The ombudsman rejected allegations of misrepresentation as unsupported by evidence of what was actually said at the point of sale, and found no evidence that Mr L would have made a different decision had the commission been disclosed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website