Not upheld: unfair credit relationship, misrepresentation under section 75 CCA, breach of Timeshare Regulations regulation 14(3), irresponsible lending, unfair contract terms complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs H complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship, denying a section 75 claim for misrepresentation, and lending irresponsibly when financing her £12,896 purchase of Fractional Club timeshare membership in September 2016. The ombudsman found no actionable misrepresentations by the Supplier, rejected claims of unfair credit relationship despite accepting a possible breach of regulation 14(3) (marketing as investment) because the evidence showed the complainants would have purchased regardless for holiday purposes, and found the lending was affordable based on the complainant's income and circumstances. The ombudsman applied a causation-based approach, finding that regulatory breaches do not automatically create unfairness under section 140A of the Consumer Credit Act 1974, and rejected all aspects of the complaint.

The Ombudsman's reasoning

The ombudsman applied a causation-based approach, finding that regulatory breaches do not automatically create unfairness under section 140A. Even accepting that the Supplier may have breached regulation 14(3) by marketing the product as an investment, the ombudsman found that Mrs H and Mr H would have purchased the membership regardless because their primary motivation was obtaining better holidays and more points, not investment returns. The evidence showed they continued upgrading despite increasing costs and took regular holidays. The ombudsman found no actionable misrepresentations because the claims either lacked supporting evidence or would not have influenced the purchase decision. Regarding the foreclosure clause, although potentially unfair in the abstract, it had not been invoked during the relevant credit agreement period and therefore did not render the relationship unfair. The ombudsman found the lending was affordable based on Mrs H's income and circumstances, and that some creditworthiness checks were performed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website