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 Regulation 14(3) of the Timeshare Regulations; undisclosed commission arrangements complaint against Tandem Bank Limited

Decision detail

Summary

Mr P complained that Tandem Bank Limited acted unfairly by financing a timeshare purchase that was allegedly misrepresented by the supplier and by participating in an unfair credit relationship. Mr P claimed the supplier misrepresented the Infiniti Club membership as having a guaranteed end date, as an investment, and as providing unique holiday access, and that the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing it as an investment. The ombudsman found no actionable misrepresentation under Section 75 of the CCA because the expiry date was accurately stated and other alleged misrepresentations were not sufficiently evidenced. On the Section 140A unfair relationship claim, while acknowledging a potential regulatory breach, the ombudsman concluded the credit relationship was not unfair because Mr P's own evidence showed he was not motivated by investment prospects, he received full pricing information, and the circumstances lacked the extreme inequality of knowledge found in comparable Supreme Court cases.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, finding that regulatory breaches do not automatically render a credit relationship unfair. While the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, Mr P's own evidence showed he was not motivated by prospects of financial gain but rather viewed any resale value as a return on his cumulative investments. The ombudsman distinguished this case from the Supreme Court's Johnson decision on the basis that: (1) no commission was paid by the lender to the supplier at the time of sale; (2) Mr P had full pricing information; (3) the supplier was not acting as Mr P's agent but as seller of contractual rights; and (4) there was no sufficiently extreme inequality of knowledge to render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website