Not upheld: Section 75 CCA misrepresentation claim and Section 140A CCA unfair credit relationship claim relating to timeshare mis-selling and undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs D and Mrs T purchased two timeshares from a Supplier in 2018 and 2019, financed by interest-free loans from Shawbrook Bank Limited. They complained that the Supplier misrepresented the timeshares as investments and that the Lender participated in an unfair credit relationship. The Lender initially failed to respond to the complaint. An Investigator partially upheld the complaint regarding the first purchase, but both parties disagreed. The ombudsman found the complaint should not be upheld. While the Supplier may have breached regulations prohibiting marketing timeshares as investments, Mrs D and Mrs T's own witness statement did not persuasively demonstrate they understood the products as investments expected to generate financial profit. Additionally, the ombudsman rejected arguments about undisclosed commission, distinguishing the case from recent Supreme Court authority because no commission was actually paid, both loans were interest-free, and the Supplier did not owe a fiduciary duty to the consumers.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A analysis, rejecting the argument that regulatory breaches alone render a credit relationship unfair. The ombudsman found that Mrs D and Mrs T's witness statement, while referring to 'investment', did not persuasively demonstrate they understood the product as something expected to generate financial profit. The ombudsman noted the timing of the witness statement (after the Shawbrook & BPF judgment) created risk of recollection being influenced by that judgment. Regarding the undisclosed commission, the ombudsman distinguished the case from Johnson v FirstRand Bank Ltd because: (1) no commission was actually paid; (2) both loans were interest-free, so there were no costs; (3) there was no evidence of a contractual or commercial tie that wasn't disclosed; and (4) the Supplier was not acting as an agent of Mrs D and Mrs T but as supplier of the timeshare. The ombudsman applied the causation principle from Carney and Kerrigan, finding that even if regulatory breaches occurred, they did not materially cause the purchases or render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website