Not upheld: Goods and services under S75 complaint against Tandem Bank Limited

Decision detail

Summary

Mr P complained that Tandem Bank Limited acted unfairly by being party to an unfair credit relationship and by refusing to pay Section 75 claims against the timeshare supplier. Mr P had financed a £14,430 Fractional Club membership purchase, which included a share in an allocated property's net sale proceeds. The ombudsman found no actionable misrepresentation regarding investment potential, as the supplier's statement that Mr P would receive 'a percentage' of his money back when the property was sold did not constitute a false statement of fact about profit. Although the supplier may have breached the prohibition on marketing timeshares as investments under Regulation 14(3), this breach did not render the credit relationship unfair because Mr P's purchase was not materially motivated by the prospect of financial gain. The undisclosed commission payment (approximately 2.5%) was too low to create unfairness under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically render a credit relationship unfair. The key finding was that Mr P's purchase was not motivated by the prospect of financial gain, despite the supplier possibly breaching Regulation 14(3) by marketing the product as an investment. The ombudsman found that even if the supplier had breached the prohibition on marketing timeshares as investments, this would not have rendered the credit relationship unfair because Mr P would have entered into the agreement regardless. The commission payment was low (approximately 2.5% of the amount borrowed) and would not have disproportionately affected the cost of credit. The ombudsman rejected claims of misrepresentation, finding that statements about receiving 'a percentage' of money back did not constitute false statements of fact about profit potential.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website