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

Decision detail

Summary

Mr M and Mrs S purchased Fractional Club timeshare membership in April 2013 for £27,911, financed by a £24,138 loan from Shawbrook Bank Limited. They claimed the Supplier misrepresented the product as a short-term property investment that would be resold at profit within 6-12 months, and alternatively as a long-term investment. They also alleged high-pressure sales tactics and that the Lender failed to conduct proper affordability and suitability assessments. The Supplier became insolvent in 2019, and Mr M and Mrs S surrendered their membership in 2016 but continued making loan payments. They complained in May 2025, approximately 12 years after purchase. The ombudsman found the section 75 misrepresentation and breach of contract claims were barred by the six-year limitation period under the Limitation Act 1980. On the section 140A unfair credit relationship claim, the ombudsman rejected all grounds, finding: (1) affordability was not an issue as all payments were made; (2) the Lender was not obliged to assess product suitability; (3) the product was a timeshare contract, not a regulated investment; (4) Mr M and Mrs S's conflicting accounts undermined their credibility; and (5) contemporaneous evidence indicated the purchase was motivated by holiday benefits, not investment. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the broad test under section 140A of the CCA, which requires consideration of all relevant facts and circumstances. However, the ombudsman found that regulatory breaches do not automatically create unfairness; the impact on the complainant must be assessed. On section 75 claims, the misrepresentation claim was barred by the six-year limitation period under the Limitation Act 1980 (cause of action accrued April 2013, claim made May 2025). The breach of contract claim was also time-barred (cause of action arose May 2014 when property was not resold as allegedly promised, claim made 12 years later). On section 140A, the ombudsman found: (1) affordability was not an issue as the Lender conducted appropriate checks and Mr M and Mrs S made all payments; (2) the Lender was not obliged to assess product suitability; (3) no specific unfair contract terms were identified with real-world consequences; (4) high-pressure sales tactics were not sufficiently proven and the cooling-off period was clearly explained; (5) the product was a timeshare contract, not a collective investment scheme, per the court's judgment in Shawbrook & BPF v FOS; (6) Mr M and Mrs S's conflicting accounts of whether the product was marketed as a short-term or long-term investment undermined their credibility; (7) the Supplier's contemporaneous notes and the surrender request letter indicated the purchase was motivated by holiday benefits, not investment; (8) even if Regulation 14(3) of the Timeshare Regulations was breached, the prospect of financial gain was not a material factor in the purchase decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website