Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claim under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr F purchased a Fractional Club timeshare membership in April 2018 for £16,000, financed by a £18,298 loan from Clydesdale Financial Services Limited trading as Barclays Partner Finance. He later complained that the supplier had misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, and that the lender was party to an unfair credit relationship. An FOS investigator upheld the complaint, but the ombudsman disagreed. The ombudsman found that while the supplier may have marketed the membership as an investment, this was not material to Mr F's purchasing decision, as contemporaneous evidence (including documents he signed) showed his primary motivation was holidays. Mr F's later witness statement, made six years after the sale, was given less weight due to the passage of time and potential influence from subsequent legal developments. The ombudsman also found that the Supreme Court's principles on undisclosed commission did not assist Mr F because no commission was actually paid to the supplier at the Time of Sale. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) by marketing the membership as an investment, this was not material to Mr F's purchasing decision. The contemporaneous evidence (Member's Declaration and Information Statement) clearly stated the primary purpose was holidays, not investment. Mr F's later witness statement, made six years after the sale and after relevant case law was decided, was given less weight due to the risk of recollection being influenced by time and subsequent legal developments. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission, but found they did not assist Mr F because: (1) no commission was actually paid to the supplier at the Time of Sale; (2) there was no evidence of a fiduciary duty owed by the supplier to Mr F; and (3) the supplier's role as credit broker was not separate from its role as seller. Regulatory breaches do not automatically create unfairness under Section 140A; they must be considered in the round with their actual impact on the consumer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website