Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Tandem Bank Limited

Decision detail

Summary

Mr M complained that Tandem Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims for misrepresentation and breach of contract relating to his purchase of Fractional Club timeshare membership financed by a £17,178 loan in August 2018. The ombudsman found insufficient evidence of actionable misrepresentation or breach of contract. Although the supplier may have breached Regulation 14(3) by marketing the membership as an investment, the ombudsman found this was not material to Mr M's decision, as he did not indicate the investment element motivated his purchase. The commission of 2.5% was found to be low and not disproportionate. The ombudsman concluded the credit relationship was not unfair under Section 140A and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied Section 75 of the Consumer Credit Act 1974 (connected lender liability) and Section 140A (unfair credit relationships). For Section 75 claims, the ombudsman found insufficient evidence of actionable misrepresentation or breach of contract by the supplier. For Section 140A, the ombudsman examined the supplier's sales practices, information provision, commission arrangements, and regulatory compliance. Although a possible breach of Regulation 14(3) (marketing as investment) was acknowledged, the ombudsman found this was not material to Mr M's decision, as he did not indicate the investment element motivated his purchase. The commission of 2.5% was found to be low and not disproportionate. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, distinguishing the case on the basis that the commission was far lower than in that case (55%) and Mr M had full information about the cost of the credit agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website