Not upheld: Goods and services under S75 complaint against Tandem Bank Limited

Decision detail

Summary

Miss D complained that Tandem Bank Limited was party to an unfair credit relationship when it financed her purchase of Fractional Club timeshare membership for £31,365, and that Tandem wrongly declined her Section 75 claim for misrepresentation. The ombudsman found that the alleged misrepresentations (that the membership would secure holiday accommodation and could be sold for profit) were not actionable. Regarding the unfair credit relationship claim, the ombudsman found that even if the Supplier breached regulations by marketing the timeshare as an investment, this did not render the credit relationship unfair because Miss D's purchase was motivated by holiday access, not investment returns, as evidenced by her own statement. The undisclosed commission of £784.13 (2.5% of the loan) was not so high as to suggest unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically create unfairness (they do not). The key finding was that Miss D's purchase motivation was access to holidays, not financial gain from the investment element. Her own statement made no mention of the investment opportunity or profit expectations, despite detailed discussion of the holiday experience. Even if the Supplier breached Regulation 14(3) by marketing the membership as an investment, this would not have rendered the credit relationship unfair because it did not motivate her purchase decision. The commission of £784.13 (2.5% of loan) was not so high as to suggest unfairness, particularly given Miss D's limited means to fund the purchase independently. The ombudsman found no fiduciary duty owed by the Supplier to Miss D when acting as credit broker, and no evidence of concealment of commercial ties or disproportionate impact on credit costs.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website