Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim for misrepresentation; undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Ms S purchased Fractional Club timeshare membership in October 2014 for £30,800 financed by a credit agreement with Clydesdale Financial Services Limited. The product included a share in net sale proceeds of an allocated property. In February 2017, Ms S complained that the Supplier had misrepresented the product as an investment and that the Lender had acted unfairly by rejecting her Section 75 claim and participating in an unfair credit relationship under Section 140A. The ombudsman found no actionable misrepresentation, as the statements made were factually accurate. Although the Supplier may have breached Regulation 14(3) by marketing the product as an investment, this breach was not causative of Ms S's purchase decision, as evidence showed she was primarily motivated by the 15-year membership term and management fee savings rather than investment returns. The undisclosed commission of £924 (3% of borrowing) was found to be low and proportionate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether any breaches or unfair conduct rendered the credit relationship unfair. While acknowledging that the Supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman found this was not causative of Ms S's purchase decision. The evidence from the Letter of Complaint (made closer to the Time of Sale) indicated Ms S was primarily motivated by the 15-year term and management fee savings, not investment returns. The later written statement was given less weight due to the time elapsed and risk of recollection being influenced by subsequent court judgments. The commission of £924 (3% of borrowing) was found to be low and not disproportionate, particularly given Ms S wanted the product and had no alternative means of payment. The ombudsman found no fiduciary duty owed by the Supplier as credit broker, and no evidence of contractual or commercial ties that were improperly concealed. Regulatory breaches do not automatically create unfairness under Section 140A; they must be considered in the round with their actual impact on the relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website