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

Decision detail

Summary

Mr and Mrs G purchased a Fractional Club timeshare membership in December 2018 financed by a £17,180 loan from Shawbrook Bank Limited. Over six years later, they complained that the membership was misrepresented as an investment in breach of Timeshare Regulations, that the Lender failed to conduct proper affordability checks, that commission was undisclosed, and that the credit relationship was unfair under Section 140A of the CCA. The ombudsman found no actionable misrepresentation, found Mr and Mrs G's recollections unreliable, and applied the Supreme Court's Hopcraft, Johnson and Wrench principles to conclude that the 10% commission was not sufficiently high to render the relationship unfair. The complaint was not upheld and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation regarding investment claims, as statements about property appreciation were opinions rather than statements of fact. Regarding the alleged breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments), while the ombudsman acknowledged competing evidence, they found Mr and Mrs G's recollections six years after purchase were unreliable and potentially coloured by subsequent case law. The ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles on commission disclosure, finding that the 10% commission was not high enough to render the relationship unfair, particularly given Mr and Mrs G's desire for the membership and lack of alternative means to pay. The ombudsman concluded that even with full disclosure of commission, Mr and Mrs G would have proceeded with the loan. No fiduciary duty was owed by the Supplier when acting as credit broker, so secret commission remedies were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website