Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation and breach of contract; undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr M purchased a timeshare membership for £4800 in August 2012, financed through a credit agreement with Clydesdale Financial Services Limited. In March 2018, he complained that the supplier had misrepresented the membership as having an allocated property and investment potential, that there was a breach of contract, and that the lender was party to an unfair credit relationship due to undisclosed commission. The ombudsman found that the sales documentation clearly showed the membership had no allocated property or investment element, contradicting the complainant's later claims of misrepresentation. The commission of £120 (2.5% of borrowing) was not sufficiently high to render the relationship unfair under section 140A, and the complainant failed to demonstrate that pressure or lack of information prevented him from making an informed choice. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation because the sales documentation clearly showed no allocated property or investment element, contradicting the complainant's later claims. The commission of £120 (2.5% of borrowing) was not so high as to render the relationship unfair under section 140A, distinguishing it from the Supreme Court's Johnson case where commission was 55%. The complainant failed to demonstrate that pressure prevented him from exercising choice, particularly given he did not use the 14-day cooling-off period and subsequently purchased another timeshare. Regulatory breaches do not automatically create unfairness under section 140A; the impact on the complainant must be considered. The complainant would likely have proceeded with the purchase even with full disclosure of commission given the ease and flexibility of the finance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website