Not upheld: unfair credit relationship under section 140A of the Consumer Credit Act 1974; section 75 connected lender liability; alleged breach of Regulation 14(3) of the Timeshare Regulations; failure to disclose commission arrangements complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs B purchased fractional timeshare memberships in 2013 and 2016, financed through credit agreements with Shawbrook Bank Limited. In December 2020, over seven years after the first purchase, Mrs B complained that the supplier had misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the lender had failed to disclose commission arrangements, and that the credit relationships were unfair under section 140A of the Consumer Credit Act 1974. The ombudsman rejected all grounds of complaint, finding that while a breach of Regulation 14(3) was possible, it was not material to Mrs B's decision-making, which was motivated by other factors. The section 75 misrepresentation claims failed as the representations were either not false or time-barred. The ombudsman concluded the credit relationship was not unfair, as the undisclosed commission of £1,225.90 (10% of borrowing) would not have materially affected Mrs B's decision to borrow.

The Ombudsman's reasoning

The ombudsman applied a holistic approach considering whether any regulatory breaches rendered the credit relationship unfair under section 140A. While accepting the possibility that the supplier breached Regulation 14(3) by marketing membership as an investment, the ombudsman found this was not material to Mrs B's decision-making, as the evidence showed her purchases were motivated by better accommodation and financial ordering rather than investment prospects. The ombudsman rejected the section 75 misrepresentation claims as the representations were either not false or made outside the limitation period. The breach of contract claim failed as the evidence did not demonstrate the supplier failed to provide the contracted holiday rights. On commission disclosure, the ombudsman found the flat-rate commission of £1,225.90 (10% of borrowing) was not disproportionate and would not have materially affected Mrs B's decision to borrow. The ombudsman applied the Supreme Court's judgment in Hopcraft, Johnson and Wrench, finding no evidence of concealed commercial ties, the supplier acting as advisor, or other conflicts of interest that would render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website