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 M purchased Fractional Club timeshare membership in September 2018 for £6,947.00, financed by a £17,094.00 credit agreement from Shawbrook Bank Limited. They complained that the supplier misrepresented the product as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the lender failed to disclose commission arrangements, and that the credit relationship was unfair under Section 140A of the Consumer Credit Act 1974. The ombudsman found that while the supplier may have breached the investment marketing prohibition, this was not material to the consumers' decision, which was primarily motivated by holiday access. The undisclosed commission of approximately 5% was not high enough to render the relationship unfair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while the supplier may have breached Regulation 14(3) by marketing the timeshare as an investment, this was not material to the consumers' decision to purchase. The evidence showed that Mrs and Mr M were primarily motivated by holiday access rather than investment returns. Their statement lacked sufficient detail about investment motivations, and the timing of their statement (after relevant case law was decided) raised concerns about recollection accuracy. The commission rate of approximately 5% was not high enough to render the credit relationship unfair, particularly given that the consumers wanted the product and had no alternative means of payment. Regulatory breaches do not automatically create unfairness under Section 140A; they must be considered in the round with their actual impact on the consumer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website