Not upheld: unfair credit relationship (Section 140A CCA), Section 75 connected lender liability, alleged breach of Timeshare Regulations, undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs O purchased Fractional Club timeshare membership in June 2014 for £11,294, financed through a credit agreement with Shawbrook Bank Limited. In January 2025, they complained that the lender was party to an unfair credit relationship and should pay a Section 75 claim based on alleged misrepresentations by the supplier. The ombudsman found the Section 75 claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the cause of action accrued. Regarding the Section 140A unfair credit relationship claim, the ombudsman found that while the supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the product as an investment, this did not automatically render the credit relationship unfair. Critically, Mr and Mrs O's own evidence did not demonstrate that the prospect of financial gain motivated their purchase. The ombudsman also found the commission arrangement (approximately 10% of borrowed amount) was not sufficiently high or improperly concealed to create unfairness. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a multi-layered analysis. First, the Section 75 claim was time-barred under the Limitation Act 1980 as it was brought more than six years after the cause of action accrued at the time of sale. Second, regarding Section 140A unfairness, the ombudsman found that while a possible breach of Regulation 14(3) (marketing timeshare as investment) may have occurred, regulatory breaches do not automatically create unfairness. Crucially, the ombudsman found that Mr and Mrs O's own evidence did not demonstrate that the prospect of financial gain was a material motivating factor in their purchase decision. The ombudsman also found the commission arrangement (approximately 10% of borrowed amount) was not high enough to render the relationship unfair, particularly given the consumers' desire for the product and lack of alternative means to pay. The ombudsman distinguished the case from the Supreme Court's Johnson decision where commission was 55% of total charge for credit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website