Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the CCA; alleged breach of Timeshare Regulations; undisclosed commission complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mrs S purchased Fractional Club timeshare membership in September 2017 for £7,292 financed through a credit agreement with Barclays Partner Finance. The membership was asset-backed, providing both holiday rights and a share in net sale proceeds of an allocated property. Mrs S complained in February 2020 alleging the Supplier misrepresented the product as an investment in breach of the Timeshare Regulations, that the credit relationship was unfair under Section 140A of the CCA, and that the Lender failed to disclose a commission payment of £182.30. The ombudsman found that while the product contained investment elements and the Supplier may have breached regulatory prohibitions on marketing timeshares 'as investments', Mrs S's own statement demonstrated her purchase motivation was obtaining more fractional points for family holidays, not financial returns. The undisclosed commission was too low (2.5% of borrowing) to render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Fractional Club membership included an investment element (share in Allocated Property), the Timeshare Regulations prohibited marketing it 'as an investment' (meaning as the primary selling point for financial gain), not merely including investment elements. Although there was competing evidence about whether the Supplier breached this prohibition, the key finding was that Mrs S's own statement demonstrated her purchase motivation was obtaining more fractional points for family holidays, not financial returns. Even if the Supplier had breached the prohibition, this would not have rendered the credit relationship unfair because Mrs S was not motivated by investment prospects. The commission of £182.30 (2.5% of borrowing) was low compared to the Supreme Court's guidance and would not have deterred Mrs S from proceeding. The Lender's affordability checks were not shown to be inadequate, and the interest rate was not excessive. Mrs S had a 14-day cooling-off period she did not exercise.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website