Not upheld: unfair credit relationship (Section 140A CCA), connected lender liability (Section 75 CCA), alleged breach of Timeshare Regulations 2010 Regulation 14(3), undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr P and Mrs H purchased a Fractional Club timeshare membership for £12,360 in December 2013, financed by Shawbrook Bank Limited. The membership included a share in net sale proceeds of an allocated property. In May 2017, they complained alleging the supplier misrepresented the product, breached contract, and that the lender participated in an unfair credit relationship. They claimed the membership was marketed as an investment in breach of Timeshare Regulations and that commission was undisclosed. The lender rejected their Section 75 claim. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship. Although there was competing evidence about investment marketing, the ombudsman found Mr P and Mrs H's purchase was not motivated by investment prospects based on their contemporaneous complaint letters. The modest commission (8.66% of credit charge) and lack of fiduciary duty meant no unfairness arose. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether any breaches or failings rendered the credit relationship unfair. While acknowledging competing evidence about whether membership was marketed as an investment in breach of Regulation 14(3), the ombudsman found this was not determinative. The key finding was that Mr P and Mrs H's purchase was not motivated by the prospect of financial gain, as evidenced by their contemporaneous complaint letters which made no mention of investment motivation. The ombudsman preferred the contemporaneous evidence over later allegations from the professional representative. Regarding Section 75 claims, no actionable misrepresentation or breach of contract was established. The commission arrangements, while possibly not fully disclosed, were modest (8.66% of charge for credit) and would not have deterred the consumers from borrowing. Regulatory breaches do not automatically create unfairness; their impact must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website