Not upheld: unfair credit relationship under Section 140A CCA; misrepresentation under Section 75 CCA; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs R purchased a Fractional Club timeshare membership for £14,280 in June 2013, financed by Shawbrook Bank Limited. The membership included a share in the net sale proceeds of an allocated property. They complained that the supplier misrepresented the product, marketed it as an investment in breach of Regulation 14(3) of the Timeshare Regulations, pressured them into the purchase, and that the lender failed to conduct proper affordability checks and failed to disclose commission payments. The ombudsman found no actionable misrepresentation, as Mr and Mrs R's primary motivation was obtaining a shorter membership term to resolve their 'in perpetuity problem' with their existing membership, not financial gain. Although a breach of Regulation 14(3) was possible, it was not material to their purchasing decision. The modest commission (8% of amount borrowed) would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to Mr and Mrs R's purchasing decision. The evidence showed their primary motivation was obtaining a shorter membership term to resolve their 'in perpetuity problem' with their existing membership, not financial gain. The ombudsman applied the principle from case law that regulatory breaches do not automatically create unfairness under Section 140A; the breach must have been causative of the consumer entering the agreement. The commission payment was modest (8% of amount borrowed) and would not have deterred the purchase. No actionable misrepresentation was established, and the lending was not shown to be unaffordable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website