Not upheld: unfair credit relationship under Section 140A CCA; connected lender liability under Section 75 CCA; alleged breach of Timeshare Regulations 2010 Regulation 14(3); undisclosed commission; alleged misrepresentation and breach of contract complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs B complained that Shawbrook Bank Limited acted unfairly by being party to an unfair credit relationship and by rejecting Section 75 claims regarding their 2014 purchase of Fractional Club timeshare membership financed by a £15,882 loan. The timeshare included holiday rights and a share in an allocated property's net sale proceeds. The ombudsman found no actionable misrepresentation, no breach of contract, and no unfair credit relationship. Although the supplier may have breached regulations by marketing the product as an investment and commission was undisclosed, these issues did not render the credit relationship unfair because Mr and Mrs B's purchase was motivated by holiday benefits rather than investment returns, the commission was modest at 10%, and they had pricing information available. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering regulatory breaches do not automatically create unfairness. On Section 75, no actionable misrepresentation was found: the investment element was genuine, no guaranteed end date was promised, and insufficient evidence supported other alleged misrepresentations. On Section 140A, the ombudsman found: (1) lending was affordable; (2) no evidence of material pressure; (3) even if Regulation 14(3) was breached regarding marketing as investment, the prospect of financial gain was not a motivating factor in the purchase decision; (4) commission at 10% was not disproportionately high compared to the Supreme Court's Hopcraft precedent (55%); (5) Mr and Mrs B had pricing information and could compare options; (6) the supplier was not acting as agent but as seller, without fiduciary duty; (7) no extreme inequality of knowledge was created.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website