Not upheld: irresponsible lending; unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation; breach of contract; undisclosed commission; breach of Regulation 14(3) of the Timeshare Regulations complaint against Tandem Bank Limited

Decision detail

Summary

Mr R complained that Tandem Bank Limited acted unfairly by entering into an unfair credit relationship and refusing to pay Section 75 claims against the timeshare supplier. Mr R financed a Fractional Club timeshare membership purchase for £23,747, which included a share in an allocated property's net sale proceeds. The ombudsman found no actionable misrepresentation by the supplier, no breach of contract, and no unfair credit relationship under Section 140A. Although the supplier may have breached regulations prohibiting marketing timeshares as investments, this breach was not material to Mr R's purchasing decision, as he was not motivated by investment prospects. The undisclosed commission of approximately 2.5% was not sufficiently high to render the relationship unfair. The complaint was rejected in its entirety.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A unfairness, considering whether regulatory breaches (such as potential breach of Regulation 14(3)) were causative of the consumer's decision to enter the credit relationship. The key finding was that Mr R's purchase was not motivated by the prospect of financial gain from the allocated property, despite the supplier possibly marketing the product as an investment. The ombudsman distinguished the case from Johnson v FirstRand on the basis that the commission was low (2.5% versus 55%), there was no evidence of a concealed commercial tie, and Mr R would have proceeded with the loan regardless of commission disclosure. The ombudsman rejected arguments about pressure, unfair contract terms, and inadequate information disclosure, finding none had material impact on the fairness of the relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website