Not upheld: unfair credit relationship under Section 140A CCA; Section 75 claim; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs M purchased Fractional Club timeshare membership financed by Shawbrook Bank in February 2015 for £4,400. Over 8 years later, they complained that Shawbrook was party to an unfair credit relationship and rejected their Section 75 claim. They alleged the Supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, failed to disclose commission, and applied unfair contract terms. The ombudsman found the Section 75 claim time-barred under the Limitation Act 1980. Although a potential breach of Regulation 14(3) existed, the evidence showed Mr and Mrs M's primary motivation was accessing enhanced holiday benefits at 'gold' tier membership, not financial gain, so any breach was not material to the fairness of the credit relationship. The commission of £44 (1% of borrowed amount) was minimal and would not have deterred the purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering whether regulatory breaches automatically created unfairness. On the Section 75 claim, the six-year limitation period from 26 February 2015 meant the claim raised on 25 October 2023 was time-barred. Regarding the alleged breach of Regulation 14(3), while the ombudsman acknowledged it was possible the Supplier marketed the membership as an investment, the evidence showed Mr and Mrs M's primary motivation was accessing enhanced holiday benefits at 'gold' tier membership, not financial gain. The commission of £44 was minimal (1% of borrowed amount) and would not have deterred the purchase. The ombudsman found no fiduciary duty owed by the Supplier as credit broker, and no sufficiently extreme inequality of knowledge to render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website