Not upheld: unfair credit relationships under Section 140A of the Consumer Credit Act 1974; Section 75 claims for misrepresentation and breach of contract; alleged breach of Timeshare Regulations; undisclosed commission arrangements complaint against Clydesdale Financial Services Limited trading as Barclays Partner Finance

Decision detail

Summary

Mr A complained that Clydesdale Financial Services Limited (trading as Barclays Partner Finance) acted unfairly by being party to unfair credit relationships and by refusing to pay Section 75 claims against the supplier for misrepresentation and breach of contract. Mr A had financed two timeshare purchases: a trial membership in March 2017 for £3,995 and a Fractional Club membership in July 2017 for £13,846, which included a share in an allocated property. The ombudsman found that the Section 75 claim for the first purchase was time-barred under the Limitation Act 1980 (raised more than six years after purchase), and that there was insufficient evidence of actionable misrepresentations for the second purchase. Regarding the Section 140A unfair credit relationship claim, the ombudsman examined whether the supplier's possible breach of Regulation 14(3) of the Timeshare Regulations (marketing the product as an investment) rendered the credit relationship unfair. The ombudsman concluded that even if such a breach occurred, it would not have affected Mr A's decision to purchase because his primary motivation was the holiday benefits, not financial gain. The ombudsman also found that the undisclosed commission arrangements (1.7%-2.53% of credit charges) were at levels that would not have deterred Mr A from proceeding. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 75 of the Consumer Credit Act 1974 (connected lender liability), Section 140A (unfair credit relationships), and the Timeshare Regulations. For the Section 75 misrepresentation claim relating to Purchase Agreement 1, the claim was time-barred under the Limitation Act 1980 (more than six years after 26 March 2017). For Purchase Agreement 2, the ombudsman found insufficient evidence of factual misrepresentations. Regarding Section 140A, the ombudsman examined the supplier's commercial conduct, information provision, commission arrangements, and evidence of pressure. The ombudsman found that even if the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the Fractional Club as an investment, this would not have rendered the credit relationship unfair because Mr A's purchase was motivated primarily by holiday benefits, not financial gain. The ombudsman applied the Supreme Court's reasoning in Hopcraft, Johnson and Wrench, finding that the commission levels (1.7%-2.53%) were not so high as to render the relationship unfair, and that Mr A had sufficient information about the cost of credit to make an informed decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website