Not upheld: Other regulated complaint complaint against Tandem Bank Limited

Decision detail

Summary

Mrs A complained that Tandem Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting her Section 75 claims for misrepresentation and breach of contract relating to her purchase of Fractional Club membership (a timeshare product) financed by a £21,355 loan. The ombudsman found no evidence of actionable misrepresentation or breach of contract by the supplier. Although there was competing evidence that the membership may have been marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, the ombudsman found this was not material because Mrs A's purchase was not motivated by the prospect of financial gain from the allocated property share. The ombudsman also considered the undisclosed 2.5% commission arrangement and applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, finding the commission was low and would not have changed Mrs A's decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assessing fairness under Section 140A of the Consumer Credit Act 1974, considering the supplier's commercial conduct, information provision, evidence of what was said at the time of sale, and the inherent probabilities of the transaction. The ombudsman found that while there was competing evidence as to whether the membership was marketed as an investment in breach of Regulation 14(3), this was not determinative. The key finding was that Mrs A's purchase was not motivated by the prospect of financial gain from the allocated property share, as evidenced by the absence of any statement from Mrs A herself suggesting this was a motivating factor, and the fact that the original complaint did not allege this. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench regarding commission disclosure, finding that the 2.5% commission was low and that Mrs A had sufficient information about the cost of the credit agreement to make an informed decision. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationship unfair in the round, particularly given that Mrs A would have proceeded with the purchase regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website