Not upheld: Goods and services under S75 complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance (BPF)

Decision detail

Summary

Mr B purchased a Fractional Club timeshare membership for £12,318 on 7 April 2017, financed by a loan from BPF. The membership included both holiday rights and a share in the net sale proceeds of an allocated property. Nearly seven years later, on 20 December 2023, Mr B (through a professional representative) complained that BPF was party to an unfair credit relationship and should pay a section 75 claim based on alleged misrepresentations by the Supplier. The ombudsman found the section 75 claim was time-barred under the Limitation Act 1980. Regarding the section 140A unfair credit relationship claim, the ombudsman examined whether the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, whether there were misrepresentations about holiday availability or investment returns, and whether commission arrangements were unfairly concealed. Although the ombudsman acknowledged it was possible the Supplier breached Regulation 14(3), the ombudsman concluded that Mr B's purchase was not motivated by the prospect of financial gain from the property share, and therefore any regulatory breach would not have rendered the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-stage analysis. First, the section 75 claim was time-barred as it was raised more than six years after the cause of action arose (7 April 2017 to 20 December 2023). Second, regarding section 140A, the ombudsman examined whether the credit relationship was unfair by considering: (1) the Supplier's sales and marketing practices; (2) information provision; (3) evidence of what was said at sale; (4) inherent probabilities; and (5) commission arrangements. The ombudsman found: (a) no actionable misrepresentation regarding holiday availability or investment potential; (b) no evidence of harassment, coercion or undue influence; (c) possible breach of Regulation 14(3) (marketing as investment) but this was not determinative; (d) Mr B's motivation for purchase was not primarily financial gain from the property share; (e) the commission of 2.50% was low and would not have deterred Mr B; (f) the Supplier did not owe a fiduciary duty to Mr B; and (g) even if regulatory breaches occurred, they did not render the credit relationship unfair given Mr B would have proceeded with the purchase regardless. The ombudsman applied the principle that regulatory breaches do not automatically create unfairness under section 140A; the impact on the complainant must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website