Not upheld: unfair credit relationship under Section 140A of Consumer Credit Act 1974; connected lender liability under Section 75 of Consumer Credit Act 1974; undisclosed commission payment; alleged mis-selling of timeshare as investment complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mrs S, a long-term timeshare member, purchased Fractional Club membership in September 2013 for £10,235, financing £7,235 through a loan from Barclays Partner Finance (the Lender). In June 2017, via a professional representative, she complained of various mis-selling concerns including alleged misrepresentations about investment status, guaranteed exit dates, and exclusivity, as well as undisclosed commission payments. The ombudsman's investigation revealed a £590.38 commission (8.16% of loan) had been paid to the Supplier but not initially disclosed. However, the ombudsman found the allegation of investment-based marketing was not credible, emerging only in 2023 despite not featuring in the original 2017 complaint, and was contradicted by Mrs S's own 2017 questionnaire responses. The ombudsman distinguished the case from the Supreme Court's Johnson precedent on commission and concluded the credit relationship was not unfair, rejecting the complaint in its entirety.

The Ombudsman's reasoning

The ombudsman applied an inquisitorial rather than adversarial approach, finding that neither party bore a burden of proof but rather allegations must be substantiated on the balance of probabilities. The ombudsman rejected the allegation that the timeshare was sold as an investment because: (1) this was not mentioned in the original 2017 complaint, only emerging in 2023 after relevant court developments; (2) Mrs S's 2017 questionnaire did not support this allegation despite being asked directly; (3) the witness statement's provenance was questionable due to inconsistencies in documentation; (4) Mrs S signed a declaration stating she understood the product was not an investment. Regarding the undisclosed commission of 8.16%, the ombudsman distinguished this from the Supreme Court's Johnson case (55% commission) and found the amount was not so high as to render the relationship unfair, particularly given Mrs S wanted the product and had no alternative means to pay. The ombudsman found no evidence of fiduciary duty owed by the Supplier to Mrs S when acting as credit broker, and concluded that even with disclosure of the commission, Mrs S would have taken out the loan.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website