Not upheld: unfair credit relationship under section 140A CCA; section 75 CCA claims (misrepresentation and breach of contract); alleged breach of Timeshare Regulations 2010 (Regulation 14(3) prohibition on marketing timeshares as investments); undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr W purchased a fractional ownership timeshare for £8,398 financed by Shawbrook Bank in September 2013. Nearly four years later, he complained that the supplier had misrepresented the product and that the lender was party to an unfair credit relationship. The complaint raised multiple grounds including alleged misrepresentation, breach of contract, breach of Timeshare Regulations (specifically the prohibition on marketing timeshares as investments), and undisclosed commission. The ombudsman found no actionable misrepresentation or breach of contract, and determined that even if the supplier had breached Regulation 14(3), this did not render the credit relationship unfair because Mr W's purchase was motivated by holiday rights (he took 97 days of holidays) rather than investment returns, and he would have proceeded regardless of fuller disclosure. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to section 140A analysis, considering: (1) whether representations constituted actionable misstatements of existing fact rather than opinions; (2) whether any breach of Regulation 14(3) was causative of Mr W's purchasing decision; (3) the impact of regulatory breaches on fairness of the credit relationship; (4) the low level of commission (8%) compared to the Supreme Court's guidance; (5) Mr W's actual motivation (holidays, not investment returns); and (6) the absence of evidence that Mr W would have made a different decision had there been fuller disclosure. The ombudsman found that even if regulatory breaches occurred, they did not render the credit relationship unfair because Mr W's purchase was motivated by holiday rights (evidenced by 97 days of holidays taken) rather than investment returns, and he would have proceeded with the loan regardless of disclosure of commission or investment marketing.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website