Not upheld: Section 75 connected lender liability for misrepresentation/breach of contract; Section 140A unfair credit relationship; alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr A purchased a Fractional Club timeshare membership in October 2017 using a £14,430 loan from Shawbrook Bank, with total repayment of £30,013 over 180 months. They complained in May 2024 (over 6 years later) alleging misrepresentation, breach of contract, breach of Timeshare Regulations, undisclosed commission, and an unfair credit relationship. The ombudsman found the Section 75 misrepresentation claim time-barred under the Limitation Act 1980. For Section 140A unfair credit relationship claims, the ombudsman determined that while the Supplier may have breached Regulation 14(3) by marketing as an investment, this was not material to the complainants' decision, which was motivated by holiday flexibility and same-day purchase incentives. The commission of 4.63% of charge for credit was not disproportionately high, and the complainants would have proceeded with the purchase regardless of disclosure failures. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980, finding that the Section 75 misrepresentation claim was time-barred as it was made more than six years after the October 2017 purchase date. Section 32 of the Limitation Act (fraud, concealment, or mistake) did not apply because the alleged problems would have been apparent shortly after purchase. For Section 140A unfair credit relationship claims, the ombudsman found: (1) the lending was affordable; (2) pressure allegations were not substantiated; (3) while the Supplier may have breached Regulation 14(3) by marketing as an investment, this was not material to the complainants' purchasing decision, which was primarily motivated by holiday flexibility and same-day purchase incentives; (4) the commission of 4.63% of charge for credit was not disproportionately high compared to the Supreme Court's Hopcraft standard; (5) the Supplier did not owe a fiduciary duty to the complainants; (6) regulatory breaches do not automatically render credit relationships unfair under Section 140A; and (7) the complainants would have proceeded with the purchase regardless of any disclosure failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website