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 Timeshare Regulations complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr A purchased Fractional Club timeshare membership in January 2016 for £10,538, financed by a £46,976 credit agreement from the lender. The membership included a share in an allocated property. Mr A complained in December 2020 that the product was misrepresented as an investment and that the credit relationship was unfair, citing undisclosed commission of £1,088.45 (2.32% of the charge for credit). The ombudsman found no actionable misrepresentation, as a share in property was inherently an investment. The ombudsman also found the credit relationship was not unfair under Section 140A because the commission was low, Mr A would have proceeded regardless of disclosure, and the supplier did not owe a fiduciary duty to Mr A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation regarding the investment characterization of the product, as a share in the allocated property was inherently an investment. Regarding Section 140A unfairness, the ombudsman considered the commission was low (2.32% of charge for credit), far below the 55% in the Johnson case, and that Mr A would have proceeded with the loan regardless of commission disclosure. The ombudsman found the supplier did not owe a fiduciary duty to Mr A when acting as credit broker, and that any regulatory breaches regarding commission disclosure did not automatically render the credit relationship unfair. The evidence showed Mr A was motivated by holiday accommodation and exclusivity rather than investment returns.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website