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

Decision detail

Summary

Mr and Mrs O purchased a Fractional Club timeshare membership on 5 August 2016 for £14,065, financed by a credit agreement with Shawbrook Bank Limited. The timeshare was asset-backed, including a share in an allocated property. Over 7.5 years later, in February 2024, Mr and Mrs O raised complaints alleging the Lender acted unfairly by being party to an unfair credit relationship and by refusing to pay a Section 75 claim. The complaints alleged the supplier had misrepresented the product, breached contract regarding holiday availability, breached Regulation 14(3) of the Timeshare Regulations by marketing it as an investment, failed to disclose information about ongoing costs, included unfair contract terms, and that an undisclosed commission was paid. The ombudsman rejected all grounds: the Section 75 misrepresentation claim was time-barred; no breach of contract was demonstrated; and the credit relationship was not unfair under Section 140A because, even if regulatory breaches occurred, they were not material to Mr and Mrs O's decision to purchase, particularly given their witness statement was made 7.5 years after the purchase and post-dated the relevant Supreme Court judgment, creating a high risk of external influence on their recollections.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. For the Section 75 claim regarding misrepresentation, the six-year limitation period under the Limitation Act 1980 had expired before the claim was notified to the Lender on 1 February 2024 (more than 6 years after 5 August 2016), making it reasonable for the Lender to reject it. For breach of contract, the evidence did not demonstrate the Supplier breached the Purchase Agreement regarding holiday availability, as terms stated availability was subject to demand and Mr and Mrs O had used their points on multiple occasions. For Section 140A unfairness, the ombudsman found: (1) insufficient evidence of pressure at the Time of Sale given the 14-day cooling-off period was not used; (2) while a possible breach of Regulation 14(3) existed regarding marketing as an investment, this was not material to Mr and Mrs O's decision to purchase, as evidenced by their own testimony lacking detail about expected financial gains and the witness statement being made 7.5 years later, post-dating the relevant Supreme Court judgment, creating a high risk of influence from external discussions; (3) information failings regarding ongoing costs were not material as Mr and Mrs O would likely have proceeded regardless; (4) no unfair contract terms were operated unfairly in practice; and (5) regarding commission, no payment was made at the Time of Sale, distinguishing this case from Hopcraft, Johnson and Wrench, and there was no evidence of improper commercial ties or disproportionate interest rates.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website