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

Decision detail

Summary

X purchased a Fractional Club timeshare membership for £12,409 financed by Shawbrook Bank Limited in March 2018. Approximately five years later, X complained that the lender was party to an unfair credit relationship and should pay claims under Section 75 of the Consumer Credit Act 1974, alleging the supplier had misrepresented the product as an investment with a guaranteed end date and as real property ownership. The ombudsman found no actionable misrepresentation or breach of contract by the supplier, and while accepting the possibility of a breach of Regulation 14(3) of the Timeshare Regulations (prohibition on marketing timeshares as investments), found this was not material to X's decision-making. The ombudsman concluded X's primary motivation was holiday use, evidenced by his successful use of the membership, failure to cancel during the cooling-off period, and willingness to exchange his property share for a smaller one 15 months later. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-stage analysis under Section 75 and Section 140A of the Consumer Credit Act 1974. For Section 75 claims, the ombudsman found no actionable misrepresentation (the representations about guaranteed end date, real property interest, and investment nature were either true or not misrepresentations) and no breach of contract (holiday availability was subject to demand as stated in the terms, and X successfully booked holidays). For Section 140A, the ombudsman examined whether the credit relationship was unfair by considering: (1) the supplier's commercial conduct and sales practices; (2) information provision and contractual documentation; (3) evidence of what was said at the point of sale; and (4) inherent probabilities. While accepting the possibility that the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, the ombudsman found this was not material to X's decision-making. The ombudsman noted that X's recollections about being told of investment potential only emerged after the Investigator's view and the Shawbrook & BPF v FOS judgment, creating a risk of recollection being influenced by subsequent events. The ombudsman found X's primary motivation was holiday use, not financial gain, evidenced by: (1) X's own statements focusing on holiday aspects; (2) X's failure to cancel during the 14-day cooling-off period; and (3) X's willingness to exchange his share in the allocated property for a smaller share 15 months later. The ombudsman rejected arguments about pressure, unfair commercial practices, and commission non-disclosure, finding insufficient evidence and applying the civil standard of proof requiring X to substantiate factual allegations rather than requiring the lender to disprove bare assertions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website