Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs P purchased Fractional Club timeshare membership financed by a £19,464 credit agreement from Shawbrook Bank Limited in June 2014. They later complained that the membership was misrepresented as an investment, that the lender failed to conduct proper affordability checks, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found no actionable misrepresentation or breach of contract, and although the supplier may have breached Regulation 14(3) by marketing the product as an investment, this was not causative of the purchase decision. The evidence indicated Mr and Mrs P were primarily motivated by holiday rights, not investment returns. The undisclosed commission of 9.96% was not high enough to render the relationship unfair. 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 it was possible the supplier breached Regulation 14(3) by marketing membership as an investment, the ombudsman found this was not causative of the purchase decision. The evidence showed Mr and Mrs P were motivated by holiday rights, not investment returns. The undated testimony provided nine years after the sale and shortly after the Shawbrook judgment was given little weight. The commission of 9.96% was not high enough to render the relationship unfair, particularly given Mr and Mrs P's lack of alternative means to fund the purchase. Regulatory breaches do not automatically create unfairness under Section 140A; their impact must be considered in the round.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website