Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the CCA; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission payments; irresponsible lending; undue pressure complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs H purchased fractional points in a timeshare product financed by Shawbrook Bank Limited in November 2013 and February 2014, and subsequently complained that the Supplier had misrepresented the product and that the Lender had participated in unfair credit relationships. The complaints alleged misrepresentation of guaranteed end dates, marketing as an investment in breach of Timeshare Regulations, undue pressure, irresponsible lending, and undisclosed commission payments. The ombudsman found no actionable misrepresentation under Section 75 of the CCA and concluded that the credit relationships were not unfair under Section 140A, as the evidence indicated Mr and Mrs H were motivated by holiday-related benefits rather than investment returns, making any regulatory breaches immaterial to their purchasing decisions. The low level of commission and lack of evidence of unaffordability or pressure supported the finding that the relationships were fair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier under Section 75 of the CCA, as there was insufficient evidence that specific guarantees about end dates or release mechanisms were made as false statements of fact. Regarding Section 140A unfairness, the ombudsman considered the Supplier's sales practices, information provision, evidence of pressure, and potential breach of Regulation 14(3) of the Timeshare Regulations (marketing as an investment). However, the key finding was that Mr and Mrs H's purchases were motivated by holiday-related benefits (shorter membership terms, platinum status) rather than the prospect of financial gain from the allocated property shares. The ombudsman applied the principle from case law that regulatory breaches do not automatically create unfairness; such breaches must be considered in the round and their causal impact on the consumer's decision is relevant. The witness statements provided were given limited weight due to timing issues and potential influence from subsequent litigation. The commission arrangements, while potentially undisclosed, were at a low level (8-8.7% of charge for credit) and would not have deterred the purchases. The ombudsman concluded that even if breaches of Regulation 14(3) occurred, they were not material to Mr and Mrs H's purchasing decisions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website