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

Decision detail

Summary

Mr and Mrs M purchased Fractional Club timeshare membership in September 2017 for £22,284.00, financed by a £25,946.00 loan from Shawbrook Bank Limited. The membership included a share in an allocated property's net sale proceeds after 19 years. In March 2025, approximately 7.5 years later, they complained that the Supplier had misrepresented the product as an investment in breach of timeshare regulations and that the Lender was party to an unfair credit relationship. They also claimed the Lender was liable under Section 75 of the Consumer Credit Act for the Supplier's misrepresentations. The ombudsman found no actionable misrepresentation, as Mr and Mrs M's evidence lacked meaningful detail and appeared influenced by subsequent case law. Although a regulatory breach was possible, the ombudsman concluded it did not motivate their purchase, which was primarily for holiday benefits. The credit relationship was not unfair, particularly as no commission was paid to the Supplier and the Supplier owed no fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation under Section 75 of the CCA, as the evidence did not support that the Supplier made false statements of existing fact. Regarding Section 140A, while the ombudsman accepted it was possible the Supplier breached Regulation 14(3) by marketing the membership as an investment, this was not determinative. The key issue was whether any breach motivated Mr and Mrs M's purchase decision. The ombudsman found their evidence lacked meaningful detail about what they were told regarding the investment element and what influenced their decision. The statement provided 7.5 years after purchase, following the Shawbrook & BPF judgment, was considered at risk of being coloured by that judgment. The ombudsman concluded Mr and Mrs M would have proceeded with the purchase for the holiday benefits regardless of any investment representations. Regarding commission, the ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench principles but found them inapplicable here because: (1) no commission was actually paid to the Supplier at the time of sale; (2) there was no evidence of contractual or commercial ties that were improperly concealed; and (3) the Supplier did not have a fiduciary duty to Mr and Mrs M when acting as credit broker.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website