Not upheld: Other regulated complaint complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr W and Mrs W complained that Shawbrook Bank Limited was party to unfair credit relationships when it provided fixed sum loans to finance the purchase of Fractional Club timeshare memberships in December 2013 and December 2014. The complainants, represented by a professional representative, alleged multiple grounds for unfairness including: breach of timeshare regulations prohibiting marketing as an investment; unfair commercial practices and pressure from the Supplier; inadequate information disclosure about ongoing costs; unfair contract terms; and undisclosed commission arrangements between the Lender and Supplier. The Lender rejected all grounds in its final response. An FOS Investigator upheld the complaint, but the Lender disagreed and requested an Ombudsman's decision. The Ombudsman issued provisional findings rejecting the complaint, which the Lender accepted but the PR rejected. After reconsidering the PR's further submissions and applying the Supreme Court's Hopcraft, Johnson and Wrench framework, the Ombudsman issued a final decision not upholding the complaint, finding that while regulatory breaches may have occurred, they were not material to the complainants' decision-making and did not render the credit relationships unfair.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, examining: (1) the Supplier's commercial conduct and sales practices; (2) information provision at point of sale; (3) evidence of what was said/done at sale; (4) inherent probabilities; and (5) any existing unfairness from related credit agreements. While accepting the possibility that the Supplier may have breached Regulation 14(3) by marketing membership as an investment, the ombudsman found this was not material to Mr W and Mrs W's decision-making, as they did not demonstrate that the prospect of financial gain was an important motivating factor. The ombudsman noted that Mr W and Mrs W only complained about a 2016 purchase, not the 2013 or 2014 purchases at issue, and that they subsequently upgraded their memberships, suggesting they were not pressured. Regarding commission disclosure, the ombudsman applied the Supreme Court's Hopcraft, Johnson and Wrench framework and found no evidence of concealed commercial ties, that the Supplier acted as advisor, or other conflicts of interest. The ombudsman rejected the PR's assertions as unsubstantiated, citing Samra for the principle that the burden is on the complainant to prove factual allegations to the civil standard, not on the lender to disprove them. The ombudsman concluded that even if regulatory breaches occurred, they did not render the credit relationship unfair given the specific circumstances and Mr W and Mrs W's likely conduct regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website