Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejected Section 75 claim; alleged irresponsible lending; alleged mis-selling of timeshare as investment; alleged undisclosed commission; alleged unfair contract terms complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr V complained to Shawbrook Bank Limited about a Fractional Club timeshare membership purchased in October 2013 for approximately £24,000 on credit. They alleged the Lender was party to an unfair credit relationship and rejected their Section 75 claim for misrepresentation and breach of contract by the Supplier. The professional representative's initial complaint incorrectly referenced a 2014 cash-funded purchase rather than the 2013 financed purchase. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980 as it was made in April 2020, more than six years after the October 2013 sale. Regarding the Section 140A unfair credit relationship claim, the ombudsman rejected allegations of unaffordability, undue pressure, and improper marketing as an investment, finding that Mrs and Mr V's pattern of upgrading purchases over three years demonstrated genuine interest in the product. The ombudsman also found the commission of 5.46% of the charge for credit was not disproportionately high and would not have deterred the purchase had it been disclosed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the Section 75 claim was time-barred under the Limitation Act 1980 because more than six years had passed between the sale date (7 October 2013) and when the claim was first made to the Lender (15 April 2020). Regarding the Section 140A unfair credit relationship claim, the ombudsman considered multiple factors including the Supplier's sales practices, information provision, commission arrangements, and potential breach of Regulation 14(3) of the Timeshare Regulations. The ombudsman concluded that: (1) affordability concerns were unlikely given Mrs and Mr V's pattern of upgrading purchases; (2) undue pressure was implausible given they made repeated purchases over three years; (3) while the membership may have included an investment element, it was not marketed or sold as an investment in a way that motivated the purchase; (4) the commission of 5.46% of the charge for credit was not disproportionately high and would not have deterred the purchase had it been disclosed; (5) Mrs and Mr V were provided with sufficient information about the cost of the Credit Agreement to make an informed decision. The ombudsman applied the Supreme Court's principles from Hopcraft, Johnson and Wrench, distinguishing this case from Mr Johnson's case where the commission was 55% of the charge for credit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website