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

Decision detail

Summary

Mr and Mrs B purchased a Fractional Club timeshare membership in 2014 for £18,693, financed by a loan from Shawbrook Bank Limited. They later complained that the supplier misrepresented the product and that the lender was party to an unfair credit relationship. The complaints included allegations that: (1) the supplier misrepresented the guaranteed end date, exclusivity, and investment potential of the membership; (2) the supplier breached Timeshare Regulations by marketing it as an investment; (3) the lender failed to conduct proper affordability checks; (4) the lender failed to disclose commission payments to the supplier; and (5) the lender was pressured by the supplier. The ombudsman found no actionable misrepresentation, as statements about investment returns were opinions rather than false facts. Although a breach of Regulation 14(3) was possible, the ombudsman concluded it was not a material motivating factor in the purchase, evidenced by Mr and Mrs B's later exit from the membership and the absence of investment motivation in their original complaint. The undisclosed commission of £1,868 (5.46% of the charge for credit) was not so high as to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under section 75 because: (1) statements about investment potential were not false statements of fact but honestly held opinions; (2) no guarantee of specific sale date was proven; (3) insufficient evidence of misrepresentation regarding exclusivity or release mechanisms. On section 140A, the ombudsman concluded the credit relationship was not unfair because: (1) the lending was affordable; (2) no credible evidence of undue pressure; (3) even if the supplier breached Regulation 14(3) by marketing as an investment, this was not a motivating factor in the purchase decision; (4) the commission was low (5.46% of charge for credit) and would not have changed the decision; (5) Mr and Mrs B's later testimony about investment motivation was unreliable given its timing and the absence of any mention of investment in the original complaint; (6) their subsequent payment to exit the membership suggested investment returns were not a motivating factor.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website