Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; Section 75 claims (misrepresentation and breach of contract); alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission; irresponsible lending complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr K purchased Fractional Club timeshare membership in September 2013 using a £13,767.84 loan from Clydesdale Financial Services Limited. The product included holiday rights and a share in net sale proceeds of an allocated property. In August 2022, over 6 years later, Mr K complained that the product was misrepresented as an investment, that the lender made irresponsible lending decisions, that the supplier breached contract regarding holiday availability, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found the misrepresentation claim time-barred, rejected allegations of actionable misrepresentation or breach of contract, and concluded that even if the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, this did not render the credit relationship unfair because Mr K's purchase was not motivated by investment prospects. The modest commission paid (2.55% of borrowing) did not create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that: (1) the Section 75 misrepresentation claim was time-barred under the Limitation Act 1980 as it was raised more than 6 years after the time of sale; (2) there was no actionable misrepresentation as the product was correctly described as including an investment element (share in allocated property), and Mr K's purchase was not motivated by investment prospects; (3) there was no breach of contract by the supplier regarding holiday availability; (4) even if the supplier breached Regulation 14(3) by marketing the product as an investment, this did not render the credit relationship unfair because Mr K's purchase decision was not motivated by investment prospects; (5) the commission paid (2.55% of amount borrowed) was not so high as to create unfairness, particularly in contrast to the Supreme Court's Johnson case (55% commission); (6) the supplier did not owe Mr K a fiduciary duty when acting as credit broker, so secret commission remedies were unavailable; (7) the lender's lending decision was not irresponsible based on the evidence provided.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website