Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations 2010; undisclosed commission payments complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr C and Ms G purchased a Fractional Club timeshare membership in May 2017 for £14,668, financed by a £16,475 loan from Shawbrook Bank Limited. They complained that the product was misrepresented regarding 'two for one' offers, guaranteed end dates, and exclusivity, and that it was marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations 2010. They also alleged the credit relationship was unfair due to undisclosed commission payments and inadequate affordability checks. The ombudsman found no actionable misrepresentation, no evidence that investment prospects motivated their purchase, and that the 5% commission was not sufficiently high to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic analysis under Section 140A of the Consumer Credit Act 1974, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and any existing unfairness. The ombudsman found: (1) no actionable misrepresentation regarding 'two for one' offers as the membership guide clearly showed ineligibility; (2) no credible evidence of pressure or impaired choice; (3) that even if Regulation 14(3) was breached regarding investment marketing, the complainants' purchase was not motivated by investment prospects but by holiday benefits; (4) that the commission of 5% was not high enough to render the relationship unfair, particularly given the complainants wanted the product and had no alternative means to pay; (5) that the supplier did not owe a fiduciary duty to the complainants when acting as credit broker; (6) that regulatory breaches do not automatically create unfairness under Section 140A and must be considered in the round with their actual impact on the complainant.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website