Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; misrepresentation claim under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Shawbrook Bank Limited

Decision detail

Summary

Mrs and Mr R purchased a Fractional Club timeshare membership in November 2018 for £18,699, financed by a £22,673 credit agreement with Shawbrook Bank Limited. They complained in January 2023 that the product was misrepresented as an investment in breach of the Timeshare Regulations and that the credit relationship was unfair. They also claimed the lender should have paid a Section 75 claim for misrepresentation. The ombudsman found no actionable misrepresentation under Section 75 and concluded that while the supplier may have breached the prohibition on marketing timeshares as investments, this was not material to the complainants' decision to purchase, which appeared motivated by holiday use. The ombudsman also found the undisclosed commission of 5% was not at a level that would render the credit relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the supplier under Section 75. Regarding Section 140A, while acknowledging the possibility of a breach of Regulation 14(3) of the Timeshare Regulations (marketing as an investment), the ombudsman concluded this was not material to the complainants' purchasing decision. The ombudsman was not persuaded that the investment element motivated their purchase, noting the limited and vague nature of their recollection provided six years after purchase and after the Shawbrook judgment. The ombudsman found the commission level (5% of borrowing) was not disproportionately high and would not have deterred the purchase had it been disclosed. The ombudsman applied the principles from Hopcraft, Johnson and Wrench but found them inapplicable given the low commission level and lack of evidence of unfair commercial ties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website