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

Decision detail

Summary

Mr T purchased a Fractional Club timeshare membership for £14,430 financed by Shawbrook Bank Limited on 14 November 2018. The membership included holiday rights and a share in the net sale proceeds of an allocated property. Mr T complained that the Lender acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims for misrepresentation and breach of contract by the Supplier. Mr T's professional representative alleged the product was improperly marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that Mr T was pressured into the purchase, that insufficient information was provided about ongoing costs, and that commission payments were undisclosed. The ombudsman found no actionable misrepresentation or breach of contract, and concluded that even if the Supplier had breached the investment marketing prohibition, this did not materially affect Mr T's purchase decision, which was primarily motivated by holiday access rather than financial gain. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-factor analysis under Section 140A of the Consumer Credit Act 1974, examining: (1) whether there were actionable misrepresentations by the Supplier; (2) whether there was a breach of contract; (3) whether the Supplier's commercial conduct was unfair; (4) the provision of information at the time of sale; and (5) whether any regulatory breaches rendered the credit relationship unfair. The ombudsman found that while it was possible the Supplier breached Regulation 14(3) by marketing the product as an investment, this did not materially impact Mr T's decision to purchase, as his primary motivation was holiday access rather than financial gain. The ombudsman noted that regulatory breaches do not automatically create unfairness under Section 140A; the impact on the consumer's decision must be considered. The ombudsman rejected arguments about insufficient information disclosure, unfair contract terms, pressure, and undisclosed commission, finding none were sufficiently evidenced or material to the outcome. The burden of proof rested on Mr T to demonstrate the credit relationship was unfair, not on the Lender to disprove unsubstantiated allegations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website