Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation under Section 75 of the Consumer Credit Act 1974; alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission payments complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs S purchased a Signature Collection timeshare membership in September 2015 for £12,123, financed by a £20,000 loan from Shawbrook Bank Limited. They subsequently complained that the Supplier misrepresented the product as an investment, that the Lender participated in an unfair credit relationship, and that commission payments between the Lender and Supplier were undisclosed. The ombudsman found no evidence of actionable misrepresentation, as the contractual documentation did not promise profits and Mr and Mrs S's own evidence suggested their primary concern was holiday availability rather than investment returns. Applying the Supreme Court's judgment in Hopcraft, Johnson and Wrench, the ombudsman found that the commission arrangements did not render the credit relationship unfair because no commission was paid at the Time of Sale and there was no evidence of an improper fiduciary relationship. The ombudsman concluded that even if the Supplier breached Regulation 14(3) by marketing the product as an investment, this would not automatically create an unfair credit relationship, and the evidence did not demonstrate that such a breach materially influenced Mr and Mrs S's purchasing decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Signature Collection membership was marketed as an investment, this did not constitute an actionable misrepresentation because the contractual documentation did not promise a profit, and there was insufficient evidence that the sales representative knew or should have known the representations were false. The ombudsman applied the Supreme Court's guidance in Hopcraft, Johnson and Wrench, finding that the commission arrangements between the Lender and Supplier did not render the credit relationship unfair because: (1) no commission was paid at the Time of Sale, (2) there was no evidence of a fiduciary duty owed by the Supplier to Mr and Mrs S, and (3) the commercial tie was not improperly concealed. Regarding Regulation 14(3), the ombudsman found that even if the Supplier breached this regulation by marketing the product as an investment, this would not automatically create an unfair credit relationship. The ombudsman applied the principle from case law that regulatory breaches must be considered in the round and that causation is relevant—whether the breach materially influenced the purchasing decision. The ombudsman concluded that the prospect of financial gain was not an important motivating factor in Mr and Mrs S's purchase decision, as evidenced by their witness statement focusing on holiday availability and points usage rather than investment returns. The questionnaires completed later were given limited weight as leading documents completed months after the complaint. The ombudsman found the loan was affordable and that Mr and Mrs S were not unduly pressured, having been given breaks, time to consider, and a cooling-off period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website