Not upheld: Goods and services under S75 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs J purchased Fractional Club timeshare membership in October 2017 for £10,840, financed by a £14,554 loan from Shawbrook Bank Limited. The Fractional Club was asset-backed, offering a share in an allocated property's net sale proceeds. Mr and Mrs J complained in January 2024 that the lender was party to an unfair credit relationship, alleging the supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, failed to disclose commission (£727.70), and provided insufficient information on ongoing costs. The ombudsman found no unfair credit relationship, concluding that Mr and Mrs J's purchase motivation was holiday benefits rather than investment returns, the commission was low at 5%, and they would have proceeded regardless of disclosure given their desire for the product and lack of alternative funding.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, considering that regulatory breaches do not automatically render a credit relationship unfair. Although the supplier may have breached Regulation 14(3) by marketing the Fractional Club as an investment, the evidence showed Mr and Mrs J's primary motivation was holiday benefits, not financial gain. The commission of £727.70 (5% of loan) was low and did not create the extreme inequality of knowledge seen in the Supreme Court's Johnson case. The supplier did not owe a fiduciary duty to Mr and Mrs J when acting as credit broker, and Mr and Mrs J would have proceeded with the purchase regardless of commission disclosure given their desire for the product and lack of alternative funding means.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website