Not upheld: Other regulated complaint complaint against Clydesdale Financial Services Limited

Decision detail

Summary

Mr P purchased Fractional Club timeshare membership in October 2017 for £16,340, financed by a loan from Clydesdale Financial Services Limited. In April 2024, he complained that the lender was liable for the supplier's alleged misrepresentations and breaches, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman rejected all grounds: Section 75 claims were time-barred (raised after six years); no actionable misrepresentation was established because Mr P's recollections were inherently improbable and inconsistent with how the product worked; and even if the supplier breached the prohibition on marketing timeshares as investments, this did not render the credit relationship unfair because Mr P's purchase was not motivated by investment prospects. The low commission (2.5%) and adequate information about credit costs meant the relationship was fair.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically created unfairness (they do not). The key reasoning was: (1) Section 75 claims were time-barred under the Limitation Act 1980 (six years from time of sale); (2) no actionable misrepresentation was proven because Mr P's own testimony was inherently improbable and inconsistent with how the product actually worked; (3) even if Regulation 14(3) was breached, Mr P's purchase was not motivated by investment prospects, so the breach did not render the relationship unfair; (4) the commission of 2.5% was low and would not have deterred Mr P from proceeding; (5) Mr P had adequate information about the cost of credit and could compare options; (6) the supplier was not acting as Mr P's agent and owed no fiduciary duty.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website