Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; rejection of Section 75 claim; alleged irresponsible lending; alleged breach of Regulation 14(3) of the Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs A purchased a Fractional Club timeshare membership in April 2017 for £6,469, financed by a £6,459 loan from Shawbrook Bank Limited. They later complained that the lender participated in an unfair credit relationship under Section 140A of the Consumer Credit Act 1974 and acted unreasonably by rejecting their Section 75 claim. The complainants alleged the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment and that the lender failed to conduct adequate affordability checks. The ombudsman found that while a regulatory breach may have occurred, it was not material to the purchasing decision as the evidence showed Mr and Mrs A were motivated by obtaining more holiday points rather than financial gain. The ombudsman also found the lending was affordable based on their combined income and existing credit commitments. Accordingly, the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the Supplier may have breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, such a regulatory breach does not automatically create unfairness under Section 140A. The key question was whether this breach was material to Mr and Mrs A's purchasing decision. The sales notes and original testimony indicated their motivation was obtaining more holiday points, not financial gain. A later statement from Mr A contradicting this was given little weight due to its timing following the Shawbrook & BPF judgment and the Investigator's findings, creating a risk of influence. The ombudsman also found the lending was affordable based on their combined monthly income of £4,428 against total credit commitments of £2,664.98 (including the new loan), leaving £1,763.02 for other expenses. The successful mortgage approval one month prior further evidenced their positive financial position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website