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 Timeshare Regulations 2010 Regulation 14(3); alleged misrepresentation and breach of contract by supplier complaint against Tandem Bank Limited

Decision detail

Summary

Mr H complained that Tandem Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims regarding a timeshare purchase. Mr and Mrs H purchased Fractional Club membership in September 2018 for £7,526 (after trade-in), financed by a £22,541 loan. The timeshare included a share in an allocated property's net sale proceeds. Mr H alleged the Supplier misrepresented the investment potential, breached contract regarding holiday availability, breached Timeshare Regulations by marketing as an investment, and that the Lender failed to disclose commission arrangements. The ombudsman found no actionable misrepresentation, no material breach of contract, and concluded that even if Regulation 14(3) was breached, Mr and Mrs H's purchase was motivated by holiday rights rather than investment returns. The 2.5% commission was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation because telling prospective members that Fractional Club membership was an investment offering a share in property proceeds was factually true. While there was competing evidence that the membership may have been marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, the ombudsman concluded this was not determinative. The key finding was that Mr and Mrs H's purchase was motivated by holiday rights rather than investment potential, as evidenced by their complaints focusing on inability to 'holiday their way' rather than investment returns. The witness statement was given limited weight due to timing concerns (drafted after the Shawbrook judgment) and lack of clarity about when it was actually prepared. The 2.5% commission was not high enough to render the relationship unfair, particularly given Mr H's knowledge of the loan terms and his desire for the timeshare. No fiduciary duty was owed by the Supplier when acting as credit broker.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website