Not upheld: Goods and services under S75 complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs G purchased Fractional Club timeshare membership for £6,692 financed by Shawbrook Bank in December 2013. The membership included a share in net sale proceeds of an allocated property. In June 2018, they complained that the product was misrepresented, sold under pressure, and marketed as an investment in breach of Regulation 14(3) of the Timeshare Regulations. They also alleged the lender failed to disclose a £535.36 commission paid to the supplier. The ombudsman found no actionable misrepresentation and, while acknowledging competing evidence on whether Regulation 14(3) was breached, concluded that even if breached, it did not render the credit relationship unfair because the complainants were not motivated by prospect of financial gain. The ombudsman found the undisclosed commission was not sufficiently high (8% of loan) to create unfairness, and the supplier did not owe a fiduciary duty. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied a holistic approach to Section 140A, considering the supplier's commercial conduct, information provision, evidence of what was said at sale, inherent probabilities, and commission arrangements. While acknowledging competing evidence on whether Regulation 14(3) was breached, the ombudsman found this was not determinative. The key finding was that Mr and Mrs G were not motivated by prospect of financial gain from the property share, despite the product's investment element. This was based on: (1) their own statement saying they were 'unsure' about the Time of Sale; (2) absence of any allegation in the Letter of Complaint that investment was the motivation; (3) other stated reasons for purchase (exit strategy from previous membership, exclusive benefits); (4) late testimony provided 12 years after sale, after previously claiming inability to recall details, and in response to a provisional rejection. The ombudsman found the commission (8% of loan, 4% of credit charge) was not high enough to render the relationship unfair, especially given the complainants wanted the product and had no alternative means to pay. The supplier did not owe a fiduciary duty when acting as credit broker, as it was not acting as agent for the consumers but as seller of the timeshare product.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website