Judgement on compensation claims for Azure Group timeshare owners

Upper Tribunal Judge Timothy Herrington in a judgement given on 15 June 2022 has finally ended a long running legal battle relating to the Azure timeshare scheme by striking out a case brought by timeshare owners but confirming the separate right to seek compensation.

The case which was heard in the Tax and Chancery Tribunal concerned 1,482 credit agreements entered by Barclays Partner Finance (‘Barclays’) between April 2014 and 2016 that were used to finance the purchase of timeshare contracts at a resort in Malta.

The applicants in the case all alleged that they were mis-sold the timeshare by the Azure Group of companies and that they were encouraged to take out the loans to purchase the timeshares.

The timeshare owners claimed they had been left significantly out of pocket due, were misled during the sales process and that the loan agreements were mis-sold.

In May 2017, Barclays applied to Financial Conduct Authority (‘FCA’) for an order seeking to validate the loan agreements which it recognised were unenforceable in law as they had been brokered by an unauthorised broker called Azure Services Limited in breach of the Financial Services and Markets act 2000.

In February 2018, the FCA granted the validation order which allowed the agreements to be enforced and interest paid under them to be retained by Barclays. However, several timeshare owners made references to the Tribunal seeking to challenging that validation order. Following a hearing the Tribunal sent the case back to the FCA directing it to look reconsider the matter again on the basis that there was evidence of potential customer detriment which had it had failed to consider.

In August 2020, the FCA decided to grant the validation order again but this time it applied conditions for Barclays to comply with. Essentially these conditions required Barclays to refund all interest and charges paid by consumers under the agreements and prohibited Barclays charging any further interest.

The FCA also directed the appointment of an independent assessor to consider individual cases and determine whether the loan agreement was affordable for the customer when it had been entered. Barclays was also directed to remove any adverse credit entries in the customer’s file relating to the agreement.

However, on 16 June 2021, the FCA notified the Tribunal that Barclays had decided to implement a remediation plan in relation to all loans affected by the validation order under which it would refund all payments made under the agreements, cancel the agreements and pay 8% interest. It also said it would remove adverse entries on the consumer customers consumer credit file.

This was obviously welcome news for the timeshare owners. The judgement says that the remediation action relates to all those affected by the validation order, so it appears to be the case that all 1,482 regulated credit agreement concerned either have or are in the process of being refunded and cancelled.

According to the Judge the remediation process has gone smoothly and by March 2022 it had been completed in respect of the 104 applicants that had made references in the Tribunal case. It is not clear from the judgement whether all the remaining agreements have been dealt with.

However, many of the timeshare owners contend that they are entitled to compensation for the stress, anxiety, financial hardship, and other difficulties experienced. The judge has recognised that the process of claiming compensation falls to be dealt with separately.

The Judge also recognised that there was a need for the FCA to make a decision on the amount of compensation that might be payable to individual customers and should clarify whether customers that have not yet made a claim whether they should now do so.

Barclays has made it clear in the judgement that it is prepared to consider claims for compensation and has engaged the services of accountants BDO LLP to assist customers who require help.

The Judge also concluded in his decision that there was a need for Barclays and the FCA to rebuild confidence with the affected consumers that compensation claims would be dealt with efficiently and fairly, adding that since the time that had elapsed since the matter came before the Tribunal he was hopeful that the matters could be settled quickly without the need for further legal action.