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

Decision detail

Summary

Mrs O and Mr O purchased Fractional Club timeshare membership in August 2017 for £9,100, financed by a £12,684 credit agreement from Shawbrook Bank Limited. They complained in June 2022 (nearly five years later) that the Supplier had misrepresented the product as an investment in breach of the Timeshare Regulations, and that the Lender was party to an unfair credit relationship. They also claimed the Lender should have paid a Section 75 claim for misrepresentation. The ombudsman found no actionable misrepresentation under Section 75. Regarding the Section 140A unfair credit relationship claim, although the ombudsman could not rule out a possible breach of Regulation 14(3), it found this was not material to the consumers' decision to purchase, as their late testimony (provided seven years after the sale) about investment motivation was unreliable and likely influenced by external factors. The ombudsman also found the undisclosed commission of 5% was too low 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 of the CCA. Regarding Section 140A, the ombudsman concluded that even if the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, this was not material to Mrs O and Mr O's purchasing decision. The ombudsman placed little weight on their late testimony (provided seven years after the sale) about investment motivation, finding it likely influenced by the Investigator's view and the Shawbrook & BPF v FOS judgment. The ombudsman also found that the commission of 5% was not high enough to render the credit relationship unfair, particularly given the consumers wanted the product and had no other means to pay for it. The ombudsman applied the principles from Hopcraft, Johnson and Wrench but distinguished the case on the basis of the low commission level and lack of evidence of concealment of commercial ties or impact on interest rates.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website