Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr M and Ms L complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting their Section 75 claim for misrepresentation and breach of contract relating to the purchase of Fractional Club timeshare membership financed by a £15,430 credit agreement. The ombudsman found no actionable misrepresentation, as statements about the investment element were not factually untrue and the prospect of financial gain was not a material motivating factor in the purchase. While acknowledging possible breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments), the ombudsman found this was not causative of the purchase decision. The ombudsman also rejected arguments about unfair contract terms, inadequate information disclosure, and undisclosed commission (£657.05, representing 2.5% of the loan), finding none rendered the credit relationship unfair under Section 140A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment under Section 140A, considering the supplier's commercial conduct, information provision, commission arrangements, and evidence of what was said at the time of sale. While acknowledging competing evidence that the supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman found this was not causative of the purchase decision. The key finding was that Mr M and Ms L were not motivated by the prospect of financial gain; they would have proceeded with the purchase regardless. The ombudsman placed limited weight on the witness statement due to its date (post-Shawbrook judgment) and the high risk of influence from subsequent discussions. The commission of 2.5% was not disproportionate compared to the Supreme Court's guidance, and the lender's failure to disclose it did not render the relationship unfair given the circumstances. Regulatory breaches do not automatically create unfairness under Section 140A; the impact on the complainant must be assessed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website