Not upheld: Goods and services under S75 complaint against Tandem Bank Limited

Decision detail

Summary

Mrs Y purchased a Fractional Club timeshare membership in April 2019 for £26,616, financed by a loan from Tandem Bank Limited. The membership included a share in an allocated property's net sale proceeds. Nearly five years later, Mrs Y complained that Tandem acted unfairly by being party to an unfair credit relationship and by rejecting her Section 75 claim against the timeshare supplier for alleged misrepresentations. Mrs Y alleged the Supplier breached Regulation 14(3) by marketing the membership as an investment, failed to disclose commission payments, and made false promises about investment returns. The ombudsman found that Mrs Y's primary motivation for the purchase was to obtain additional holiday points (upgrading from 910 to 1,360 points) rather than to achieve financial gain, as evidenced by the Supplier's own notes and Mrs Y's limited testimony about investment motivation. Consequently, even if regulatory breaches occurred, they would not have changed her purchasing decision. The commission amount (£652.83, or 2.50% of borrowing) was low and did not create the extreme inequality of knowledge required to establish unfairness under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically created unfairness. The key finding was that Mrs Y's purchase motivation was to obtain additional holiday points (upgrading from 910 to 1,360 points) rather than to achieve financial gain from the property investment element. This was evidenced by: (1) Supplier's own notes stating the motivation was to get more points and benefits for holidays; (2) Mrs Y's statement making no mention of investment motivation for this specific purchase; (3) the fact she already held an asset-backed membership, so if investment returns were motivating, she would have mentioned upgrading for better returns. The ombudsman found that even if Regulation 14(3) was breached, or if commission was undisclosed, these would not have changed Mrs Y's decision because the financial gain prospect was not material to her purchase decision. The commission amount (2.50% of borrowing) was low and did not create the 'sufficiently extreme inequality of knowledge' required under Section 140A principles established in Hopcraft, Johnson and Wrench. Regarding Section 75 misrepresentation claims, the ombudsman found that statements about investment potential were honestly held opinions rather than false statements of fact, and Mrs Y provided insufficient evidence of specific misrepresentations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website