Not upheld: unfair credit relationship; alleged irresponsible lending; alleged mis-selling of timeshare as investment; alleged undisclosed commission; alleged misrepresentation; alleged undue pressure complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr T complained that Shawbrook was party to an unfair credit relationship when it provided a £8,549 loan to finance his purchase of an upgraded FPOC timeshare membership in April 2014 at 19.1% APR. He alleged the Supplier applied undue pressure, failed to assess affordability, sold the membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, made misrepresentations about his previous membership being worthless, and that Shawbrook failed to disclose commission payments. The ombudsman found that Mr T's investment allegation was only raised after the Shawbrook & BPF v FOS judgment and was absent from his original 2016 complaint, suggesting it was influenced by that judgment rather than reflecting his actual recollection. The ombudsman found Mr T likely purchased the upgraded membership for the significantly increased holiday entitlements (two weeks annually versus one week every other year) and that he had a 14-day cooling-off period. The commission of £854.90 (9.91% of the loan) was not high enough to render the relationship unfair. The ombudsman concluded that even if regulatory breaches had occurred, they would not automatically create unfairness under Section 140A, and causation was important. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 140A of the CCA and considered whether the credit relationship was unfair by examining the Supplier's sales practices, information provision, and commercial arrangements with Shawbrook. The ombudsman found that Mr T's allegation of being sold the membership as an investment was only raised after the Shawbrook & BPF v FOS judgment and was not mentioned in his original complaint, suggesting it was influenced by that judgment rather than reflecting his actual recollection. The ombudsman found Mr T likely purchased the upgraded membership for the increased holiday entitlements (two weeks annually versus one week every other year) rather than investment prospects. The ombudsman rejected claims of undue pressure, finding Mr T had a 14-day cooling-off period and had experienced a similar sales process the previous year. Regarding commission, the ombudsman found the 9.91% rate was not high enough to render the relationship unfair, distinguishing it from the 55% commission in the Johnson case. The ombudsman concluded that even if regulatory breaches occurred, they did not automatically create unfairness under Section 140A, and causation was important—Mr T would likely have taken the loan regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website