Not upheld: unfair credit relationship under Section 140A CCA; Section 75 claims (misrepresentation and breach of contract); undisclosed commission; alleged breach of Timeshare Regulations complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs P purchased Fractional Club timeshare membership in November 2018 for £14,130 using a loan from Shawbrook Bank Limited. In October 2025, over six years later, they complained that the Lender was party to an unfair credit relationship and should pay Section 75 claims for alleged misrepresentations and breach of contract by the Supplier. The ombudsman found the misrepresentation claim time-barred under the Limitation Act 1980, rejected the breach of contract claim as the Purchase Agreement stated holiday availability was subject to demand, and concluded the credit relationship was not unfair under Section 140A. Although the Supplier may have breached Regulation 14(3) by marketing the product as an investment, Mr and Mrs P's evidence showed their purchase was motivated by holiday rights and luxury accommodation rather than financial gain. The undisclosed commission of £706.50 (5% of the loan) was not sufficiently high to render the relationship unfair, particularly given Mr and Mrs P wanted the product and had no alternative means of payment.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A claims, finding that regulatory breaches do not automatically render credit relationships unfair. The Section 75 misrepresentation claim was time-barred as it was raised more than six years after the Time of Sale. The alleged breach of contract regarding holiday availability was not substantiated as the Purchase Agreement stated availability was subject to demand. Regarding the alleged breach of Regulation 14(3) (marketing as investment), even if such a breach occurred, the evidence showed Mr and Mrs P's purchase motivation was not primarily financial gain but included holiday rights and luxury accommodation. The commission of 5% was not high enough to render the relationship unfair, particularly given Mr and Mrs P wanted the product and had no alternative means of payment. The Supplier did not owe a fiduciary duty to Mr and Mrs P when acting as credit broker, so secret commission remedies were unavailable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website