Diamond Resorts Fractional Ownership Claims | Timeshare Solicitor

High Court Judge Upholds Decisions of The Financial Ombudsman Service

We write with some good news for timeshare owners regarding timeshare claims involving Fractional Ownership products sold by Diamond Resorts and Club la Costa.

We have, in previous articles, advised that this firm has been working on behalf of numerous clients presenting similar fact evidence complaints to the Financial Ombudsman Service (“FOS”). 

A copy of our previous articles can be read below:



Fractional Products and Complaints to the Financial Ombudsman Service – Test Cases

One product which has been the cause of numerous complaints is membership in fractional owners property clubs sold and managed by Club La Costa and Diamond Resorts.  These products have been financed by a number of UK Financial Institutions including Shawbrook Bank Limited, Clydesdale Financial Services Limited t/a Barclays Partner Finance and Hitachi.  

It is a matter of record that the FOS has been in receipt of hundreds of consumer complaints about fractional ownership timeshare selling.  Faced with these complaints the FOS decided to select two lead cases for detailed consideration and after a lengthy inquisitorial procedure lasting several years and including receiving industry submissions at sequential stages, two extensive final Ombudsman decisions were issued in these cases at the end of 2021 (“the Test Cases”).  In each case the Ombudsman decided the product had been mis-sold and the contractual arrangement, including the associated loan, should be unwound.  Each decision is put on a number of alternative bases but they were intended to represent a comprehensive application of relevant legal and regulatory principles.  As well as applying them to the facts of the individual test cases, the FOS no doubt has a view as to the efficient disposal of the bulk of the other outstanding cases.  

Athena law acted for one of the two test complainants and were of course pleased when the FOS upheld our client’s complaint, following a lengthy review of evidence and legal submissions. In the test cases the FOS had concluded: 

  1. There had been a breach by the sellers of the products of regulation 14(3) of the Timeshare Holiday Products (Re-sale and Exchanged Contracts) Regulations 2010 (“the Timeshare Regulations”) prohibiting the sale of a proposed timeshare contract or long-term holiday product as an investment.  
  2. There had been a breach of regulation 12 of the Timeshare Regulations in that there was a failure to give consumers required information in a form which was clear, comprehensible and accurate, sufficient to enable consumers to make an informed decision about whether or not to enter into the contract.
  3. Even if regulation 12 of the Timeshare Regulations did not require such information, good industry practice at the time would have provided such information to be provided. 
  4. Key contractual terms of the timeshare scheme were unfair for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”).  
  5. The Courts would be likely to find an unfair relationship existed for the purpose of section 140A of the Consumer Credit Act 1974 (“CCA 1974”).
  6. A fair and reasonable remedy required the setting aside of the underlying loan agreement, a full refund of all payments made, and interest at 8% per annum calculated from the date of loss to resolution of the complaint.

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