Not upheld: Irresponsible lending complaint against Clydesdale Financial Services Limited, trading as Barclays Partner Finance

Decision detail

Summary

Mrs S complained that BPF acted unfairly by participating in an unfair credit relationship and declining a Section 75 misrepresentation claim relating to a £12,500 restricted-use loan used to finance Fractional Club timeshare membership purchased in June 2013. The ombudsman found the Section 75 claim was outside the statutory scope as the purchase price of £56,511 exceeded the £30,000 limit. For the Section 140A unfair credit relationship claim, the ombudsman found that Mrs S's primary motivation was obtaining a membership with a defined 19-year term to replace their open-ended Holiday Club membership, not investment returns or other alleged misrepresentations. Although the Supplier may have breached regulatory requirements regarding investment marketing and commission disclosure, these breaches did not render the credit relationship unfair as they would not have changed Mrs S's purchasing decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a two-pronged test for assessing whether any regulatory breach regarding investment marketing would have led to an unfair credit relationship: (1) whether the product was sold as an investment, and (2) whether any breach would have changed the purchasing decision. The evidence showed Mrs S's primary motivation was obtaining a membership with a defined end date to replace their open-ended Holiday Club membership, not investment returns. The ombudsman found that even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this would not have altered Mrs S's purchasing decision. Regarding the undisclosed commission of £1,250 (10% of amount borrowed, 5.9% of charge for credit), the ombudsman distinguished the case from the Supreme Court's Hopcraft decision, finding the commission was not disproportionately high and there was no evidence of a concealed commercial tie or that the commission affected the interest rate charged.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website