Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim for misrepresentation; alleged breach of Timeshare Regulations; undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr M purchased a Fractional Club timeshare membership in April 2016 for £8,890, financed by a £26,934 loan from the lender. The membership included holiday rights and a share in an allocated property's net sale proceeds. In August 2023, Mr M complained that the supplier had misrepresented the product as an investment in breach of the Timeshare Regulations, that the lender failed to pay a Section 75 claim, and that the credit relationship was unfair due to undisclosed commission and other failings. The ombudsman found the Section 75 claim time-barred under the Limitation Act 1980 and rejected the Section 140A unfair relationship claim because, even if regulatory breaches occurred, Mr M's purchase was not materially motivated by the prospect of financial gain and the commission was low. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering whether regulatory breaches automatically create unfairness (they do not). The key finding was that Mr M's purchase decision was not materially motivated by the prospect of financial gain from the property share, even if the supplier had breached Regulation 14(3) by marketing the product as an investment. The ombudsman found the commission was low (2.5% of amount borrowed) and would not have deterred Mr M from taking the loan. The Section 75 claim was time-barred as it was raised more than six years after the time of sale. Regulatory breaches and information failings, even if established, did not render the credit relationship unfair given their lack of material impact on Mr M's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website