Not upheld: unfair credit relationship under Section 140A CCA; misrepresentation under Section 75 CCA; breach of Regulation 14(3) Timeshare Regulations; undisclosed commission complaint against Tandem Bank Limited (successor to Lender H)

Decision detail

Summary

Mr M purchased Fractional Club timeshare membership in February 2019 using credit from Lender H (later assigned to Tandem). He complained in June 2021 alleging the Supplier misrepresented membership as an investment, breached contract, and that the credit relationship was unfair under Section 140A CCA, citing breach of Regulation 14(3) of the Timeshare Regulations and undisclosed commission. The FOS Investigator upheld the complaint based on breach of Regulation 14(3), but the Ombudsman disagreed. The Ombudsman found: (1) no material misrepresentation as investment statements were not factually false and did not motivate the purchase; (2) no breach of contract as Mr M retained all membership rights; (3) no unfair credit relationship despite possible regulatory breach, as Mr M would have proceeded regardless and the commission was low (2.3% of credit charge). The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 75 CCA, Section 140A CCA, and Regulation 14(3) of the Timeshare Regulations. On misrepresentation: telling prospective members they were investing in a property share was not factually false, and Mr M's purchase was not motivated by investment potential. On breach of contract: no evidence Mr M lost membership rights or ability to holiday or claim share proceeds. On unfair credit relationship: while a breach of Regulation 14(3) was possible, regulatory breaches do not automatically create unfairness under Section 140A. Causation was critical - Mr M would have entered the agreement regardless of any breach. The commission was low (2.3% of charge for credit) compared to the Supreme Court's guidance in Hopcraft, Johnson and Wrench (55% was 'so high'). Mr M's late written recollections were unreliable as they appeared influenced by the Shawbrook & BPF v FOS judgment. The Supplier did not owe Mr M a fiduciary duty when acting as credit broker.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website