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 Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs P purchased Fractional Club timeshare membership in July 2019 for £21,484, financed by a £25,989 credit agreement from Shawbrook Bank Limited. The membership included a share in net sale proceeds of an allocated Spanish property. Nearly five years later, in July 2024, they complained that the supplier had misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the lender had unreasonably rejected their Section 75 claim, and that the credit relationship was unfair under Section 140A. The ombudsman found that while the product did include an investment element (the property share), telling prospective members this was not a factual misrepresentation. Although a breach of Regulation 14(3) was possible, Mr and Mrs P's witness statement—provided five years after the sale and after relevant case law was decided—carried limited weight. Their own testimony focused on holiday benefits and pressurised sales rather than investment returns, suggesting they would have purchased regardless. The commission of 5% was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic assessment under Section 140A of the Consumer Credit Act 1974, examining the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and any related credit agreement unfairness. The key findings were: (1) telling prospective members that fractional club membership was an investment offering a financial return was not factually untrue, as the share in the property constituted an investment; (2) while there was competing evidence about whether membership was marketed as an investment in breach of Regulation 14(3), this was not determinative without evidence that such marketing materially motivated the purchase; (3) Mr and Mrs P's witness statement, given almost five years after the sale and after the Shawbrook & BPF judgment, carried limited weight due to the risk of recollection being influenced by subsequent discussions; (4) Mr and Mrs P's own testimony focused on holiday benefits, pressurised sales techniques, maintenance fees and accommodation availability rather than investment returns; (5) their prior purchase of a timeshare product suggested interest in holiday benefits rather than investment; (6) the commission of 5% was not high enough to render the relationship unfair, particularly given Mr and Mrs P knew the price of membership and cost of credit; (7) even if regulatory breaches occurred, they did not automatically create unfairness under Section 140A; (8) causation was important—whether any breach materially motivated the purchase decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website