Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim; alleged breach of Timeshare Regulations; undisclosed commission arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Ms C and Mr H complained that Shawbrook Bank Limited acted unfairly by rejecting their Section 75 claim regarding alleged misrepresentations by the timeshare Supplier and by being party to an unfair credit relationship under Section 140A of the Consumer Credit Act 1974. They purchased Fractional Club timeshare membership in August 2015 for £31,065 financed by the lender, but did not raise complaints until November 2021, making the Section 75 claim time-barred. The ombudsman found the lender properly rejected the time-barred claim and that the credit relationship was not unfair, as evidence showed the consumers' purchase motivation was based on exclusivity and quality rather than investment returns, even if the Supplier may have breached Regulation 14(3) by marketing as an investment. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering regulatory breaches do not automatically create unfairness. The Section 75 claim was properly rejected as time-barred (more than six years after the Time of Sale). Although the Supplier may have breached Regulation 14(3) by marketing as an investment, the evidence showed Ms C and Mr H's purchase motivation was based on exclusivity and quality rather than investment returns. The lender did not pay commission at the Time of Sale, distinguishing this from the Supreme Court's Hopcraft/Johnson/Wrench precedent. No fiduciary duty was owed by the Supplier when acting as credit broker. The lending was affordable and no evidence of unfairness in the credit relationship was established.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website