Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; rejection of section 75 claim; alleged misrepresentation and breach of contract by supplier; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Ms O purchased Fractional Club membership (a fractional timeshare with a share in an allocated property) in July 2014 for £10,930, financed by a loan from Shawbrook Bank Limited. Nearly 10 years later, she complained that the Lender acted unfairly by rejecting her section 75 claim for misrepresentation and breach of contract, and that the credit relationship was unfair under section 140A of the Consumer Credit Act 1974. She alleged the Supplier misrepresented the product as an investment, breached the Timeshare Regulations, pressured her into the purchase, and that the Lender failed to conduct affordability checks and failed to disclose commission. The ombudsman found the misrepresentation claim time-barred, the breach of contract claim unsubstantiated, and that while a possible breach of the Timeshare Regulations existed, it was not causative of Ms O's purchase decision as she was motivated by holiday rights rather than investment prospects. The ombudsman concluded the credit relationship was not unfair and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A analysis, examining the Supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and any existing unfairness. The ombudsman found that: (1) the section 75 misrepresentation claim was time-barred under the Limitation Act 1980; (2) alleged breaches of contract were not substantiated; (3) while a possible breach of regulation 14(3) of the Timeshare Regulations existed, it was not causative of Ms O's purchase decision as she was not motivated by investment prospects but by holiday rights; (4) the commission of 9.93% was not high enough to render the relationship unfair, particularly given Ms O's knowledge of the credit terms and her desire for the product; (5) Ms O was not pressured into the purchase and had a 14-day cooling-off period she did not use; (6) regulatory breaches do not automatically create unfairness under section 140A but must be considered in the round with their impact on the complainant; (7) the debenture post-dated the sale and could not retroactively make true statements false.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website