Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the CCA; undisclosed commission; alleged breach of Timeshare Regulations 2010/2012 complaint against Tandem Bank Limited

Decision detail

Summary

Mrs L complained that Tandem Bank Limited acted unfairly by financing a timeshare purchase that was misrepresented as an investment and by failing to pay Section 75 claims against the supplier. The timeshare (Fractional Club membership) included a share in an allocated property's net sale proceeds. The ombudsman found no actionable misrepresentation because statements about investment potential were not false—the property share was genuinely an investment. Although the supplier may have breached regulations prohibiting marketing timeshares as investments, this breach did not render the credit relationship unfair because evidence showed Mrs L's primary motivation was securing better holiday availability through additional fractional points, not financial gain. The undisclosed commission of approximately 2.5% was not disproportionate and would not have altered Mrs L's decision. The ombudsman concluded the credit relationship was fair and rejected the complaint in its entirety.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assess fairness under Section 140A of the CCA, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and commission arrangements. The key finding was that Mrs L's purchase was motivated by a desire to secure better holiday availability (more fractional points), not by the prospect of financial gain from the property share. Therefore, even if the supplier breached Regulation 14(3) by marketing membership as an investment, this breach did not render the credit relationship unfair because it did not induce Mrs L's purchase decision. The commission of 2.5% was not so high as to be disproportionate, and Mrs L would have proceeded with the loan regardless of disclosure. No fiduciary duty was owed by the supplier when acting as credit broker, so secret commission claims failed. Regulatory breaches do not automatically create unfairness under Section 140A; their impact must be assessed in context.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website