Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 claim for misrepresentation; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Tandem Bank Limited

Decision detail

Summary

Mrs D and Mr M purchased Fractional Club timeshare membership in October 2018 for £27,399, financed by a £31,574 loan from Tandem Bank Limited. The membership included a share in an Allocated Property's net sale proceeds. In February 2023, they complained that the supplier misrepresented the investment as appreciating in value and that the lender participated in an unfair credit relationship, citing alleged breaches of Regulation 14(3) of the Timeshare Regulations and undisclosed commission. The lender rejected the complaint. The ombudsman found no actionable misrepresentation under Section 75 and concluded the credit relationship was not unfair under Section 140A because the consumers' purchase motivation was holiday access rather than investment returns, the commission was low at 2.5%, and proper disclosure of cooling-off rights was provided. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 because statements about investment appreciation were opinions honestly held by sales representatives, not false statements of fact. Regarding Section 140A unfairness, the ombudsman concluded that even if the supplier breached Regulation 14(3) by marketing the timeshare as an investment, Mrs D and Mr M's purchase was not motivated by the prospect of financial gain but rather by their desire for holiday access. The evidence from their own statement showed little support for investment motivation. The commission of 2.5% was not high enough to render the relationship unfair, particularly when compared to the 55% commission in the Johnson case. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench but found them inapplicable given the low commission level, lack of evidence of concealment of commercial ties, and the consumer's clear desire for the product. The 14-day cooling-off period was properly disclosed, and there was no evidence of pressure impairing the consumers' ability to exercise choice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website