Not upheld: Goods and services under S75 complaint against Honeycomb Finance Limited

Decision detail

Summary

Mr S complained that Honeycomb Finance Limited acted unfairly by being party to an unfair credit relationship and by rejecting a Section 75 claim regarding his purchase of Signature Collection timeshare membership financed by a £11,549 loan in April 2019. Mr S alleged the Supplier misrepresented the membership as an investment and that this breached Regulation 14(3) of the Timeshare Regulations. The ombudsman found no actionable misrepresentation under Section 75 and, while acknowledging a possible breach of Regulation 14(3), concluded that Mr and Mrs S's purchase was motivated by holiday upgrade benefits (guaranteed designated week, superior accommodation, reduced maintenance charges) rather than investment prospects. The ombudsman rejected the complaint, finding no unfair credit relationship under Section 140A as the alleged regulatory breach was not causative of the purchase decision.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, finding that regulatory breaches do not automatically render credit relationships unfair. The key finding was that Mr and Mrs S's purchase decision was not materially motivated by investment prospects but rather by holiday upgrade benefits (guaranteed designated week, superior accommodation, reduced maintenance charges). The ombudsman noted the illogicality of retaining their existing fractional club membership if investment returns were the primary motivation. Even assuming a breach of Regulation 14(3), the ombudsman found no causal link between such breach and the decision to enter the credit agreement. Regarding Section 75, no actionable misrepresentation was found as the representations made were either factually accurate or honestly held opinions. The commission arrangements, unlike in the Supreme Court's Johnson case, did not involve actual commission payments at the time of sale and did not create a sufficiently extreme inequality of knowledge.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website