Upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations; misrepresentation of timeshare as investment complaint against Shawbrook Bank Limited
Financial Ombudsman decision DRN-6310377 of 2026-05-06T00:00:00+00:00. unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations; misrepresentation of timeshare as investment complaint against Shawbrook Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6310377 |
|---|---|
| Decision date | 2026-05-06T00:00:00+00:00 |
| Firm | Shawbrook Bank Limited |
| Product | timeshare with credit agreement |
| Claim type | unfair credit relationship under Section 140A of the Consumer Credit Act 1974; breach of Regulation 14(3) of the Timeshare Regulations; misrepresentation of timeshare as investment |
| Outcome | Upheld |
| Remedy | The Lender must: (1) Refund the difference between repayments under the Credit Agreement and what would have been paid under the previous Loan 1, including adjusting any outstanding balance and future repayments; (2) Refund the difference between annual management charges paid under FC Membership 2 and what would have been paid under FC Membership 1; (3) Deduct the value of promotional giveaways used and the market value of holidays taken using FC Membership 2 points in excess of entitlement under FC Membership 1 (or alternatively deduct corresponding annual management charges); (4) Add simple interest at 8% per annum to each net repayment from the date made until settlement; (5) Remove any adverse credit file information recorded in connection with the Credit Agreement within six years of the decision; (6) If FC Membership 2 remains in place, indemnify Mr and Mrs D against all ongoing liabilities provided they assign or hold the allocated property interest for the Lender. |
Summary
Mr and Mrs D purchased Fractional Club membership on 29 August 2017 for £6,286, financed by a credit agreement with Shawbrook Bank Limited. Fractional Club membership was asset-backed and included a share in an allocated property's net sale proceeds. Mr and Mrs D complained that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing the membership as an investment, and that the Lender participated in an unfair credit relationship. The Ombudsman initially rejected the complaint but, upon reconsideration, found that the Supplier's training materials and sales practices demonstrated that membership was marketed with emphasis on financial returns and property ownership benefits. Mr and Mrs D's testimony, particularly when considered alongside their earlier purchases in 2012 and 2014, showed that the prospect of financial gain was an important motivating factor in their purchasing decision. The Ombudsman concluded that the Supplier's breach of Regulation 14(3) rendered the credit relationship between Mr and Mrs D and the Lender unfair under Section 140A of the Consumer Credit Act 1974, and upheld the complaint, ordering comprehensive compensation including refunds of excess repayments, interest, and removal of adverse credit information.
The Ombudsman's reasoning
The Ombudsman initially found the complaint should not be upheld, but upon reconsideration in the second provisional decision, concluded that the Supplier breached Regulation 14(3) of the Timeshare Regulations by marketing and selling Fractional Club membership as an investment. The training materials showed sales representatives were encouraged to emphasize financial advantages, property ownership, and returns at the end of the membership term. The Ombudsman found that Mr and Mrs D's testimony, when considered alongside their earlier purchases in 2012 and 2014 where they explicitly stated investment was pushed, demonstrated that the prospect of financial gain was an important and motivating factor in their purchasing decision. The Ombudsman rejected the Lender's arguments that the lack of detail in Mr and Mrs D's testimony or the existence of disclaimers undermined their account. The regulatory breach, combined with evidence that it materially influenced Mr and Mrs D's decision to enter into the credit agreement, rendered the credit relationship unfair under Section 140A of the Consumer Credit Act 1974.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Shawbrook Bank Limited, all decisions | 2,486 | 17% |
Source
Read the original decision on the Financial Ombudsman Service website