Not upheld: unfair credit relationship under Section 140A of the CCA; connected lender liability under Section 75 of the CCA; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission; irresponsible lending; undue pressure; misrepresentation; breach of contract complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs T and the estate of Mr T complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims for misrepresentation and breach of contract relating to a £13,293 Fractional Club timeshare purchase in 2013. The timeshare included holiday rights and a share in net proceeds from an allocated property. The complaint raised multiple grounds including alleged misrepresentations about exit options and guaranteed end dates, breach of contract regarding property proceeds, unfair contract terms, undue pressure, irresponsible lending, undisclosed commission, and alleged breach of the prohibition on marketing timeshares as investments. The ombudsman found no actionable misrepresentation or breach of contract, and determined the credit relationship was not unfair under Section 140A of the CCA. While acknowledging a possible breach of the investment marketing prohibition, the ombudsman found this was not material to the purchasing decision, which appeared motivated by the shorter membership term and holiday rights rather than investment prospects. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment of the entire credit relationship under Section 140A of the CCA, considering all circumstances including the supplier's conduct as the lender's statutory agent under Section 56. While acknowledging that a breach of Regulation 14(3) (prohibition on marketing timeshares as investments) was possible, the ombudsman found that: (1) the allegation was not made in the original complaint; (2) the evidence did not support that the purchase was motivated by investment prospects; (3) the questionnaires and later evidence were unreliable or leading; (4) the primary motivation appeared to be the shorter membership term and holiday rights; (5) even if a breach occurred, it was not material to the purchasing decision; (6) the commission level (8%) was not disproportionate compared to the Supreme Court's guidance in Hopcraft, Johnson and Wrench; (7) regulatory breaches do not automatically create unfairness under Section 140A; and (8) causation between any breach and the decision to enter the credit agreement was lacking.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website