Not upheld: unfair credit relationships (section 140A CCA), irresponsible lending, misrepresentation (section 75 CCA), breach of timeshare regulations, unfair contract terms complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs H complained that Shawbrook Bank Limited acted unfairly by entering into unfair credit relationships, denying their section 75 claim for misrepresentation, and lending irresponsibly. They had purchased timeshare fractional club membership on multiple occasions between 2015 and 2018, financed by three credit agreements totalling approximately £40,821. They alleged the Supplier made six misrepresentations and that the product was marketed as an investment in breach of regulation 14(3) of the Timeshare Regulations. The ombudsman found that while a breach of regulation 14(3) may have occurred, it did not render the credit relationships unfair because Mr and Mrs H's primary motivation was obtaining better holidays, not investment returns. The ombudsman rejected all other allegations of misrepresentation, unfair terms, and irresponsible lending, finding the lending was affordable and appropriate checks were conducted. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a causation-based approach, finding that even if regulatory breaches occurred (such as marketing as an investment in breach of regulation 14(3)), they did not render the credit relationships unfair under section 140A because Mr and Mrs H would have entered into the agreements regardless. The ombudsman found that Mr and Mrs H's primary motivation was obtaining better holidays through upgraded membership, not investment returns. The evidence showed they took holidays between purchases and explained their upgrades were driven by needing more points for desired benefits, not profit expectations. The ombudsman rejected allegations of misrepresentation, finding most claims either unsupported by evidence or not actionable. Regarding affordability, the ombudsman found the lending was affordable based on stated incomes and continued upgrades. The commission payment was not disproportionate at 5% of the loan amount. The foreclosure clause, while potentially unfair in abstract terms, had not been invoked and therefore did not render the relationship unfair in practice.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website