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

Decision detail

Summary

Mr S and Mrs S purchased Fractional Club timeshare membership for £15,041 in August 2015, financed by Shawbrook Bank Limited. The membership was asset-backed, including a share in an allocated property's net sale proceeds. In March 2019, through a professional representative, they complained that the product was misrepresented as an investment and that they could not holiday when they wished, and that the lender was party to an unfair credit relationship. The ombudsman found no actionable misrepresentation because describing the product as an investment was not untrue given the property share, and no specific end date guarantee was proven. No breach of contract was found as availability was subject to demand and the consumers did use their points. Although a possible breach of Regulation 14(3) regarding marketing as an investment was acknowledged, the ombudsman concluded this was not material to the purchasing decision, as the evidence did not demonstrate financial gain was a motivating factor. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis under Section 75 and Section 140A of the Consumer Credit Act 1974. On Section 75, no actionable misrepresentation was found because: (1) describing the product as an investment was not untrue given the share in the allocated property; (2) no guarantee of a specific end date was proven; (3) availability limitations were disclosed and the consumers did use their points. On breach of contract, the ombudsman found no evidence the supplier failed to deliver holiday rights as contracted, noting availability was subject to demand. On Section 140A unfairness, the ombudsman considered: (1) sales and marketing practices - finding no evidence of improper pressure given the 14-day cooling-off period was not used and a further purchase was made in 2016; (2) possible breach of Regulation 14(3) regarding marketing as an investment - finding even if such a breach occurred, it was not material to the purchasing decision because the evidence did not demonstrate financial gain was a motivating factor; (3) information provision - finding no evidence that lack of information would have changed the purchasing decision; (4) commission arrangements - distinguishing the case from Hopcraft, Johnson and Wrench on the basis that no commission was actually paid at the time of sale, and the supplier was not acting as a fiduciary agent. The ombudsman gave limited weight to later evidence from Mr S and Mrs S, finding it was leading in nature, potentially influenced by the investigator's view and subsequent case law, and contained assertions not present in original statements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website