Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; section 75 claim for misrepresentation; alleged breach of Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs H purchased fractional timeshare membership for £18,754 financed by a £21,901 loan from Shawbrook Bank Limited in June 2017. Over seven years later, they complained that the lender was party to an unfair credit relationship and that the lender should have paid a Section 75 claim for alleged misrepresentation by the supplier. The complaints alleged the supplier marketed the product as an investment in breach of the Timeshare Regulations, failed to disclose commission arrangements, and made misrepresentations about investment returns and holiday access. The ombudsman found no evidence of material misrepresentation, concluded that even if the supplier breached the investment marketing prohibition, Mr and Mrs H's purchase was not motivated by investment prospects, and determined that the 10% commission was not sufficiently high or concealed to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no factual and material misrepresentation by the supplier regarding investment claims, holiday access, or property value appreciation. While acknowledging it was possible the supplier breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded that even if such a breach occurred, Mr and Mrs H's purchase was not motivated by the prospect of financial gain. The ombudsman applied the Supreme Court's framework from Hopcraft, Johnson and Wrench regarding commission disclosure, finding that the 10% commission was not high enough to render the relationship unfair, particularly given Mr and Mrs H's desire for the product and lack of alternative means to finance it. The ombudsman noted that Mr and Mrs H's recollections, provided over 7 years after purchase and after relevant court judgments, lacked corroboration and may have been influenced by subsequent legal developments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website