Not upheld: Goods and services under S75 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs W complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and rejecting section 75 claims regarding their 2014 purchase of Fractional Club timeshare membership for £7,909. They alleged the supplier misrepresented the product as an investment and that the lender failed to conduct proper affordability checks and failed to disclose commission payments. The ombudsman found no actionable misrepresentation under section 75, and while acknowledging a possible breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments), concluded that Mr and Mrs W's purchase was motivated by a desire to exit existing membership rather than investment prospects. Applying Supreme Court principles on commission, the ombudsman found the 9.91% commission was not high enough to render the relationship unfair, particularly given the complainants wanted the product and had no alternative means to pay. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A analysis, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and any existing unfairness. On section 75, the ombudsman found no actionable misrepresentation by the supplier. Regarding the alleged breach of Regulation 14(3) (marketing as investment), while acknowledging it was possible the supplier breached this prohibition, the ombudsman found that Mr and Mrs W's purchase was not motivated by investment prospects but rather by a desire to exit existing membership and lack of alternatives. The ombudsman found the undated, unsigned statement provided a decade after the sale and shortly after relevant case law was decided to be unreliable. On commission, applying the Supreme Court's Johnson/Wrench/Hopcraft principles, the ombudsman found the commission level (9.91% of amount borrowed) was not high enough to render the relationship unfair, particularly given Mr and Mrs W wanted the product and had no alternative means to pay. The ombudsman rejected arguments about regulatory breaches, noting that such breaches do not automatically create unfairness under section 140A and must be considered in the round with their actual impact.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website