Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; connected lender liability under section 75 of the Consumer Credit Act 1974; alleged breach of Timeshare Regulations 2010; alleged misrepresentation; alleged breach of contract complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr S and Mrs V purchased Fractional Club timeshare membership for £16,430 in February 2018, financed by Shawbrook Bank Limited. The membership included a share in net proceeds from the eventual sale of an allocated property. After Mr S lost his job due to illness in 2020, they fell into arrears and their membership was suspended. In April 2024, they complained that the supplier had misrepresented the product as an investment, breached contract regarding holiday availability, and that the lender was party to an unfair credit relationship. The ombudsman found the misrepresentation claim time-barred, no breach of contract established, and crucially, that the consumers' purchase was not motivated by investment returns (as evidenced by their own witness statement). Therefore, even if the supplier breached regulations by marketing the product as an investment or failed to disclose information, these breaches would not have materially affected the consumers' decision-making and did not render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to assess fairness under section 140A of the Consumer Credit Act 1974, considering: (1) the supplier's commercial conduct and sales practices; (2) information provision at time of sale; (3) evidence of what was said/done; (4) inherent probabilities; and (5) any related credit agreement unfairness. The key finding was that the prospect of financial gain from the allocated property was not an important and motivating factor in Mr S and Mrs V's decision to purchase, as evidenced by their own witness statement making no mention of investment returns. Therefore, even if the supplier breached regulation 14(3) by marketing the product as an investment, or failed to disclose information, these breaches would not have materially affected their purchasing decision. The commission arrangement (5% of borrowing) was not sufficiently high or concealed to render the relationship unfair when compared to the Supreme Court's guidance in Johnson. The misrepresentation claim was time-barred under the Limitation Act 1980 (six years from time of sale). No breach of contract was established as the consumers' inability to secure certain holiday dates was consistent with the terms regarding availability subject to demand.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website